Read the following article and do the multiple choice task given below. During the past quarter-century European workers have grown used to ever-rising wages and ever-shorter working lives

The Holiday’s Over

During the past quarter-century European workers have grown used to ever-rising wages and ever-shorter working lives. They enjoy long vacations and reduced workweeks, and retire well before 65. European countries were proud to provide free education and health care and generous pensions. Those benefits were affordable as long as economy made up for the costs, but now a shrinking population and dwindling productivity mean the perks are no longer sustainable. The average per-capita economic growth in the EU dropped steadily from 2.6% annually in the 1970s to 2.1% in the 1980s and just 1.7% in the 1990s. The falloff will likely be even steeper over the next decades. Women in the EU are having on average 1.5 babies, well below the 2.1 required to keep the population stable. At the same time, the proportion of people over 65 is rising sharply. If these trends continue and policy is left unchanged, the EU’s working-age population will drop by about 40 million by 2050.

All this will widen the gulf between Europe and the US, where long-term growth has remained constant and birthrates high, thus replenishing the workforce. US workers on average spend 475 hours more on the job per year than they do in the Netherlands. But now the economic decline is forcing governments in France, Germany, Italy and elsewhere to become more American in their approach to labor policy. If European economies are to attain the goal of fighting off long-term stagnation and unemployment, then Europeans will have to work longer and harder – or for less pay.

For workers like Rudiger Hass, it is already happening. He took a 10% cut last year to save his job. Hass is a 19-year veteran of Dienes Werke, a company in Overath, near Cologne, that makes cutting equipment. Sales fell last year to €35 million, and CEO Bernd Supe-Dienes, the grandson of the founder, is doing all he can to cut costs. A decade ago he started moving some production to Hungary, where labor costs are one-quarter what they are in Overath. Since then, he’s created 200 jobs in Hungary, and just 40 in Germany. Last year he reached an agreement with German employees to reduce working hours by 10% in return for a cut in pay.

Hass accepts the push into Hungary: it wouldn’t be possible for the same products to be made as competitively in Germany. “We didn’t oppose the decision since it was done for the benefit of the company. It is better to give up some jobs to keep the company alive,” he says. He isn’t thrilled about earning less, but it’s better than being out of work.

Many other German firms have been moving production abroad. Last week, a survey showed nearly one in four German firms intends to transfer some facilities out of the country over the next three years. The exodus is not just in high-wage manufacturing, but also corporate operations such as administration or R and D. The oft-cited reasons are high labor costs and inflexible rules.

But shifting production isn’t enough for Supe-Dienes, who is now trying to shrink his Overath workforce from 200 to 175. It’s a cumbersome process that requires giving formal notice and often going before a labor tribunal. The procedure can take about four months, and usually ends in an out-of-court settlement.

Union bosses, like Michael Sommer, head of the German Trade Union Federation, maintain that the government “needs to start an active economic policy, or else the nation will be driven further into crisis.” Even militant French unions see the current system needs an overhaul; there simply aren’t enough younger people to continue paying for the retirement of their parents’ generation. It’s not just union members who feel this conflict. A recent poll in Le Monde acknowledges that 80% of French people see financing their pensions as a serious problem that needs to be tackled urgently.

Arcelor, Europe’s largest steel company, may provide a glimpse into Europe’s workplace future. For 15 years, starting in the mid 1970s, everyone over 50 took early retirement. It was part of the government-subsidized restructuring program for the steel industry. But when the government stopped the subsidies in 1990 after protests from rival steel firms and other French industries, the company had to take appropriate measures. The answer was a program to push the retirement age out to 60, and upgrade skills. The jobs of everyone over 50 were guaranteed, and thousands were retrained to use computerized equipment. People under 50 were told they would be laid off if other work could be found for them. It paid off. Overall productivity doubled in the 1990s, and half of the increase was due to the improved skills of the steelworkers.

Not all European countries are affected equally. Britain likes to contrast its less regulated economy – including more flexible hiring and firing rules – with those on the Continent to explain why UK unemployment is at 5% of the labor force compared with almost 9% in Germany and 9% in France. But not even the UK has been spared the longer-term decline common to the rest of Europe.

(From ‘Time’, abridged)