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By Philippe Legrain 2 COMMENTS

Over a million people took to the streets of France on Tuesday in protest at prime minister Dominique de Villepin’s proposed new employment law, with another national strike called for next Tuesday. Students and trade unions are bitterly opposed to the plans to make it easier for companies to hire and fire young workers. They see it as an assault on young people’s right to secure jobs, but de Villepin says it is essential to reduce France’s youth unemployment rate of 22%. Both sides are wrong.

As the presence of hundreds of thousands of young French people
working in London and the South-East amply testifies, the French
economy is failing to produce enough jobs. There are two main reasons
for this. The first is the heavy burden of taxes on labour, which
causes companies to economise on it as much as possible – witness how
understaffed restaurants in France are. The second is rigid
job-protection laws, which make it very hard to fire staff, even in a
downturn. The combined effect is security for those in work, but at the
cost of high unemployment, predominantly among the young and the
socially excluded, such as those living in the suburbs that erupted in
riots last year.

De Villepin’s new "contract of first employment" is a half-baked
attempt to mitigate the harm done by France’s rigid and burdensome
labour laws. It would allow companies to take on young workers without
promising them a job for life: during a two-year trial period they
could fire them again at will. This would probably do some good at the
margin: it would make companies more willing to take the risk of hiring
unproven young people, who would thereby gain some valuable job
experience. But it would be unlikely to have much of an impact on
unemployment, since it would do nothing to lower the cost of hiring
workers or the burden of holding on to unneeded older staff. And it
creates a perverse incentive to hire young people for just under two
years and then fire them in order to stop being stuck with them forever
come what may.

But the protesters do not have right on their side either. For a
start, if the law creates even a few new jobs, surely this is better
than long-term unemployment? While it makes sense for trade unions, who
represent the cosseted insiders lucky enough to be virtually
unsackable, to resist any erosion of job protection laws that might one
day harm their members, to do so on the principles of equality and
solidarity with the (jobless) young is hypocritical humbug. In opposing
a measure that would benefit them somewhat, the students either do not
understand the causes of France’s high unemployment or calculate that
they will eventually be insiders too, for which a few years of
unemployment may be a price worth paying. The opposition of France’s
suburban underclass, who potentially have most to gain from getting a
foot on the job ladder, suggests a profound despair that the system is
rigged against them regardless.

French history and President Chirac’s record both suggest that the
government will eventually cave in to the protesters. But de Villepin’s
presidential rival, interior minister Nicolas Sarkozy, has suggested a
better way forward: a broader overhaul of the country’s labour laws,
with a new employment contract offering job security that increases
steadily with tenure. Combine that with a shift in the burden of
taxation from labour to environmental "bads", and France could finally
make a big dent in its dole queues. Anglo-Saxon deregulation it
wouldn’t be, but a big step in the right direction even so.

Posted 30 Mar 2006 in Blog, France
  1. Phil Andrew says:

    Legrain has a big desire to support immigrants, please ,please Mr Legrain, emigrate!
    I live in Bradford and am sick to see how the excesses of immigration have made the city an undercity! Cosmopolitan you middleclasses may call it, but then you drive off to your suburban lives and leave the workers to suffer as the slums develop around them. Immigration in Britain may have brought ethnic diversity, so what, I’d rather missout and not have all the drugs the immigrants bing to this city and make millions selling! The policewoman killed last year in Bradford was killed by, yes you guessed it , immigrants, assylum seekers ! Thanks a bunch to immigration.
    Get real Mr Legrain, too much immigration will cause massive problems as the economy starts to slow, and it will!

  2. Ishrat. says:

    Dear Mr P. Legrain,
    I wish to congratulate you for your wonderful book and your dedicated writings. I enjoyed it hugely.
    May I please draw your attention to my my huble request?
    Unfotunately, we donot have any forums to discuss our questions based on different books we read.
    I whole heartedly agree with most of your views, but still remained puzzled about our comples characters. You are lucky to meet all these nice people at the grass root level. Sadly, I met a few people who seem to enjoy blaffing people for their ulterior motives.
    I wonder whether we need to look deeply at humans’ vindictive nature for selfish personal gains and the same is not confined to affluent socities of the rich world. The wealthy people of third world equally exploit poor people in their own environments and do not act any differently to the people of western globe for their own advantages.
    May be we should re-look at the definition of educations. What does it mean? A promise of a huge may packets or people should should be respected for their own abilities, offered laboures for common good of mankind and thei honest livings to maintain their self respec for themselves, for their families, keith and kin and fellow citizens of our globes.
    I know many low income and fixed income families of our country are unable to maintain their ordinary life style which cannot be comared with the life style of the rich and famous all over the world.
    Our Governments, politicians and their cronies perform their P.R duties to become famous and self seeking.
    What do you think of our Banks, Building Socities and Fiance sectors staff members’ bullying authorities? Their new trends are, they must take a copy of clients’ passports and feed those confidentials infomations in their internal data storage systems on ground of terrorisms, money laundering and ill-legal income.
    These staff members are perfect and beyond any corruptoins. So, when a few of these employees get involved in lucrative business of ” identity theft” to boost their bank accounts, the helpless customers must pay the price of their sins, because customers followed those organisations policy with questining the implications. I suppose these kinds of unilateral rules come under the definition of democracy and human rights. Please donot misunderstand me, I am no objection to checking a clients identity, only taking copies of the same which could be mis-used by the employees of those companies.
    I tried to draw attention of the Banks’ Building Socities chief executives, The FSHA, our Govt Departments, but decided to ignore me for my bottom class status.
    Now, do you see why I have come to accept the curses of human natures rather than any particular zone of our universe.
    I cannot resist from mentioning that, yor dear mother is a lucky and very blessed lady and she is fortunate to have a son like youeself.
    I would be more than happy to have a face to face chat with you and share my sorrowful work experiences with you in our home-land.
    Regards and god wishes to your good self, family members and your extra ordinary mother.
    Thank you.
    (A bottom class female).

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