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March 20, 2006
Protectionist Labor Laws Don't
A recent change in employment law in France has caused an uproar among the youth. But first, imagine if employers here in the US were forbidden from firing workers. What do you think would be the effect on the job situation? Obviously, employers would be extremely careful about who they hired. It would slow down the employment situation considerably; you don't want to go on a hiring binge if your business is taking off, because you may get stuck with poor performers that you couldn't then get rid of. Business growth would slow as a result, and the economy would be the worse for it. Not only that, getting young people hired would be tougher; even the local fast food joint would have to get picky.
Now, socialists might say that guaranteed jobs are good. They said that in France. But this put their employers in a bind and stunted growth. And while the original intent of this guarantee was to supposedly help the working class, it hurt the unemployment picture because employers did indeed get very picky and cautious in their hiring practices. Thus a general truism regarding liberal law was again demonstrated; what sounded good in theory didn't work at all, and was actually counterproductive, in practice.
So what's a Leftist to do? Change the law, of course, to allow more employment. The trouble is, you've created a culture of entitlement, and folks don't give it up that easy. Just ask Prime Minister Dominique de Villepin of France.
The French government faced a deepening crisis at the weekend as protesters turned out in large numbers to oppose a new law intended to reduce youth unemployment. Opponents worry the law will threaten job security.Police said more than half a million people turned out in various French cities, demanding the withdrawal of the First Employment Contract, or CPE, which says people under the age of 26 may lose their jobs without cause during the first two years of employment.
...
The law forms part of an initiative by Villepin to respond to grievances expressed last fall during riots by unemployed, mostly Muslim immigrant youths. It would allow employers to bypass protectionist labor laws that companies say prevent them from hiring more freely.
...
In this case, however, the protesters don't want to change the system; they want to retain traditional labor laws that offer job security, protection and benefits.
Some analysts say the students are resisting reform, while others attribute the protests to France's stagnant economy and high unemployment rate.
"These students have been raised in a culture of job security, a job for life, and they were expecting a job for life," said Philippe Moreau Defarges, a senior fellow at the French Institute of International Relations (IFRI).
"But now they have a fear that they will not find a job."
So the French workers insist they prefer to keep a 10% unemployment rate and stagnant economic growth rather than give employers any shot at weeding out the under-performers (only within the first 2 years, mind you). They fear they won't find a job? Are they finding any now?
Unemployment in France is around 10 percent, but in the under-26 range, 23 percent do not have jobs. Among immigrant youths, the figure runs as high as 50 percent.
No doubt the Frenchman (or Muslim youth) on the street would say that this is a matter of benefiting the labor force, without which there would be no businesses. On the other hand, without a climate in which businesses can thrive, you aren't going to have a good employment picture.
It's a symbiotic relationship that liberals in France and the US would be wise to remember before preaching against the stereotypical "evil corporation". Neither side--labor and management--is generally without fault or misbehavior, but when American liberals look to Europe for economic solutions, just remember how good we have it.
Murphy's Law of Labor: "Protectionist" labor laws don't.
Posted by Doug at March 20, 2006 09:13 PM