Sixth Republic?

10 April 2006



French Government Caves in on Labor Laws

The French Government’s new labor law that made it easier to fire young people from their first jobs is no more. Prime Minister Dominique de Villepin and President Jacques Chirac had to withdraw it after intense street protests. The left, the unions, the students and their sympathizers have won the day. However, that doesn’t change the fact that one in four French youths doesn’t have work.

France has failed to solve the jobs question that arose about 25 years ago. Simply put, there isn’t enough work to go around given the high non-wage costs and the difficulty in firing workers who aren’t performing. As a result, management prefers to automate as much as possible. Indeed, the French have 80% capital per worker than the British. Productivity has risen dramatically to cover up the high unemployment. However, there are limits to the efficiency of trading productivity for another worker.

France suffers from what some call a classic “insider-outsider” problem. Outsiders can’t get in very easily, and once in, workers get a 35-hour week, loads of computers and such with which to work and that lasts until they retire. So, needless to say, the insiders vote to keep the status quo. As a result, the French economy has created just 2.5 million jobs in the last decade, hardly an inspiring result. Two-thirds of French people in a recent poll said their ambition was to become a civil servant, which suggests the problem is cultural. With all its flaws, it is the free-market and small business that creates the most jobs the quickest, if the laws permit it.

So, young Frenchmen and Frenchwomen have long-term unemployment as a feature of their regular life. A great many, some 15,000 per month, leave France for the opportunities of the UK. According to the Guardian, “About two-thirds of the French moving to Britain are under 36, and three-quarters are single. They are often qualified mathematicians or engineers.” The EU is a wonderful thing, allowing France to export its ambitious and educated youth.

The future for the French economy is going to be dictated by politics; this is true for every nation, no matter what the Marxists may preach about economic determinism, but it is especially true for France. The current government is mortally wounded here, the president is the lamest of ducks now, and there is a sense in which power has moved from the government to the various interest groups in France. The Fourth Republic fell under such circumstances.

© Copyright 2006 by The Kensington Review, Jeff Myhre, PhD, Editor. No part of this publication may be reproduced without written consent. Produced using Fedora Linux.


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