Bowing to pressure from students and unions unwilling or unable to comprehend simple economics, the French government withdrew the initiative that would’ve enabled employers to dismiss employees under 26 within a two year probationary period.
Prime Minister Dominique de Villepin, the author of the law, announced he was backing down from the measure, saying that he believes both unions and businesses misunderstood his intentions. “I’m sorry about that,” he said in an announcement. Villepin said the upheaval over the law “reveals a social anxiety” in France and said the government will work with unions and businesses to “prepare for the future of our country.”
They didn’t misunderstand his intentions as much as they filtered those intentions through an ancient (and flawed) economic prism which said permanent employment is a right, regardless of merit or effort. Unfortunately for the prime minister, French unions are “preparing” for the future of France, which will include further unemployment, economic decay, and societal turmoil. Turning France away from that requires leadership. Anyone who would be the next president of France needs to understand that. Prime Minister Villepin is apparently not the one.
Is there any data comparing unemployment rates between countries with permanent employment and more flexible policies?
Chris,
Good question. I hadn’t looked at any numbers before blogging because I was operating under the general principle that forced labor retention is a disincentive to business owners. As a business owner myself, I’d be highly reluctant to hire anyone, even in expanding times, if I knew I couldn’t fire them. I don’t think I’m alone in that conclusion.
As for numbers, I looked at the CIA’s World Factbook, which lists unemployment data for 2005. Here’s what I found:
Germany: 11.6%
France: 10.0%
Slovenia: 9.8%
Hungary: 7.1%
Canada: 6.8%
Sweden: 6.0%
US: 5.1%
UK: 4.7%
Norway: 4.2%
Ireland: 4.2%
I’m not an economist, and I don’t want to imply a direct cause/effect relation that may not bear out under further scrutiny. But… a cursory glance shows a clear, I think.
I can glance at that list and guess pretty clearly what their employment policies are like with one exception – Norway. Any ideas where their policies stand?
I don’t know all of them, but I know Germany and France are very focused on permanent employment through government mandate. Restricted work weeks, no firing, all the classic central planning goodness.
My understanding of Norway is that it’s more socialistic, but I don’t know for certain. It’s a small country and Nokia has a huge impact, so that probably helps.
The one outlier, which I included because I like the country, is Slovenia. I think it’s more useful to show it because they’re still a developing economy, having gained independence barely 15 years ago. They’re trying, but clearly having some issues. I don’t know how much of a holdover that is from the Communist system (a lot, I suspect), or poor economic choices (I don’t think so.) I was there in ’98 and it was vibrant. Apparently it’s still growing.