While France awaits the television address of its President Jacques Chirac Friday, a former official of the French Treasury has pre-empted him with a clear and devastating analysis of France’s self-inflicted crisis.
Jean-Philippe Cotis is chief economist of the Organization for Economic Cooperation and Development and thus still based in Paris where he can witness the mass street protests and riots that have rocked France for the second time in six months. He now declares in Le Monde that “the French employment system is itself the cause of job insecurity”.
The usual excuses simply will not wash, Cotis argues. Globalization is not the source of France’s problems. Indeed, looking at the performance of some of France’s best corporations, like insurance giant AXA, retail chain Carrefour, and Airbus,and France’s dominance of the global luxury goods market, globalization is something the French can do very well.
The core of the problem, Cotis suggests, is that French employers are required by law to pay too much and too long for people with too few skills who produce too little work.
“The cost of low skilled labor, the combined total of the minimum wage and the real cost to the employer (in payroll taxes and social security charges) can constitute an insurmountable barrier to employment,” he notes.
The French system gets the worst of both worlds, Cotis notes. It spends lavishly on the same high levels of unemployment as the Scandinavian countries, but without their focus on retraining the unemployed to return to the labor market. Instead, the French government leaves it to the employer, while also putting onerous legal barriers in the way of either shedding labor or requiring workers to retrain.
French dinner tables these days resound with anecdotes about the impossibility of firing staff. One British newspaper faces fines of over $24,000 for dismissing one of its cleaners after they moved to much smaller offices. A bookshop owner of my acquaintance had to pay a fine when she dismissed a new employee who refused to put books on the shelves, claiming this was “manual” labor when she had sought an “intellectual” job where she could use her college degree.
A small construction and renovation company unknowingly hired an ex-convict who then disappeared with a company truck and tools. They fired him, claiming both theft and that he had lied about his prison conviction. But they lost the case and had to pay a fine when the industrial tribunal, to which the convict appealed while out on bail, ruled that an employer had “a social duty” to be understanding in helping to re-integrate a former convict into the world of work.
A landscape gardening firm in the Dordogne was unable to fire a new employee, even though he had broken half a dozen laws by burning garden rubbish on a client’s property in mid-summer, causing a sizeable fire that several fire brigades had to extinguish.
Since it is costly to hire new staff and so difficult to fire them, employers prefer not to hire new staff but invest instead in state-of-the-art machinery, which explains why French productivity per hour worked is higher than in Britain and the United States.
“Among the 20 countries in the OECD where we have made this comparison, France is the one where the cost of unskilled labor has remained highest in proportion to median earnings. And the cost of unskilled labor has since 1988 risen faster than media earning over the past 7 years,” Cotis notes.
“France is simultaneously accumulating more unskilled young workers than most countries while also increasing the costs to the employer of hiring them,” he adds. “This can increase unemployment in the future while also creating two different minds of labor market, with serious social consequences. The young are unprotected, and under-employed, while middle-aged people of 35 to 55 have very good job security.”
What all this means is that the controversial new labor law reform that has plunged France into crisis is almost beside the point. The Premiere Contrat d’Embauche, or first job contract that allows the employer to dismiss a new hire below the age of 26 without explanation or appeal, is like applying sticking plaster to a grievous wound.
To tackle its deep structural problem, France needs better basic education, better training for young people heading for their first job, a labor tribunal system that is less biased against employers and a social insurance system that rewards work and new skills rather than unskilled idleness. In short, France needs a new socio-economic system, and there are few signs from the embattled and unpopular government that it dares to devise one, far less deliver it.
President Chirac, who has looked almost irrelevant during the riots and demonstrations and university occupations of the past month, is now seeking to have it both ways. He is supporting the PCE as a symbol on France’s need for reform, and backing his hand-picked Prime Minister Dominique de Villepin against the opposition of the students and the labor unions. But at the same time, as “President of the whole French people,” Chirac is calling for an end to the crisis through more dialog and a renewed commitment to French values of social solidarity.
Chirac is not quite whistling while Paris burns. Once again, as he did when the immigrant youth rioted last fall and burned cars by the thousand, he is speaking in the name of France to the people of France, taking advantage of the almost monarchic role that General Charles De Gaulle awarded himself as President when he drew up the constitution of the Fifth Republic nearly 50 years ago.
But insofar as Chirac is fighting at all, he has chosen the wrong struggle, making the very modest reform of the CPE into a symbol of the real battle that he and his government are ducking by leaving France’s fundamental problem almost untouched. President since 1995, Chirac has presided over a wasted decade for the reforms France needs.
World Peace Herald