The French have hit the streets, again. This time it is over government attempts to loosen strict labor laws that make it hard for employers to lay people off. The Constitutional Council in France has upheld the government's proposal, thus the nation will come to a halt.
The law basically removes job protections for workers under the age of 26. To American youth who have no idea what a "job protection" is, it is hard to see what the big beef is all about. Even I am having a hard time understanding this overpowering sense of entitlement that many French seem to feel when it comes to state protection and assistance. That said, over the years in my trips to Southwest France, I have seen this attitude changing somewhat. But the Southwest is France's answer to Orange county. I can't speak for the rest of the country.
The French suffer from a type of schizophrenia when it comes to the government. They have a fundamental mistrust of the government while at the same time, an over-dependence on the welfare state. From the French perspective, the government is full of elitist politicians with their hands in everyone's pocket, nobles in need of a little metaphorical decapitation. The welfare state however, is a fundamental part of the Republic in that it maintains the mechanisms for redistribution of wealth and control over the elites. The French all complain about the civil service (bloated and spoiled) and power of trade unions (which are making up a smaller percentage of the workforce). But at the same time, they tend to support strikers. What is worse, the youth are now all aspiring to become civil servants. As the Economist put it, "What a chilling lack of ambition."
Here is the scarier part: 68% of the French are against the changes. So it is no surprise that the youth have managed to bring the country to a halt. (and please, no comparisons to the student protests of 1968. That was about democracy. These protests are about nanny state benefits. Not the same thing.)
France has a long running, persistent problem with double digit unemployment, especially among the young. This is in part what sparked the riots last year. With EU rules that allow the free movement of labor among the members, the employment pressures are increasing.
From my perspective, the problem with the government plan is that it isn't coupled with a job creation program. They see their proposal as THE job creation program. I agree with the hard line that the government is taking, but I am not convinced this alone will solve the problems. The whole labor market has to be opened up. I bet they will have to negotiate a settlement that will result in some half-measure that changes very little, which is what always happens.
One example of a half measure was the 35 work week, which was supposed to create more jobs. That failed because it wasn't coupled with looser employment regulations thus making hard for employers to ramp up production to meet demand because they were limited in the overtime they could grant. It also penalized the average French worker by cutting salaries for newer employees who are paid by the hour. This came at the same time that consumer prices and demand were rising in France.
It is time for the political elite to bite the bullet and make the hard changes that a modern, globalized economy requires. And if the French public wants to cry foul on capitalism, I'd remind them that they are quite happy buying subs (now with cup holders!), yacking on cell phones, typing away on home computers, taking vacations to exotic destinations, and getting fat like the rest of us in the free world. This all thanks to capitalism and globalization.
If France wants to create more jobs and keep its best and brightest at home, it must become more competitive. It has to loosen its labor laws, end subsidies in key sectors, liberalize the business environment and cut the red tape that makes opening a small business difficult. And while they are at it, start letting retail outlets run sales when they want rather than limiting them to twice a year. It's such a drag, you know.