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April 01, 2006
Le employment
Much has been written about what's happening in France. If I was a recent graduate about to enter the workforce, I'd be pretty pissed off that the rules had been changed under me. To recap, the CPE law says that employers would have the right to fire staff under 26 without explanation over an employee's two year trial period. After the first months, they must give two weeks' notice, and after six months the notice period is one month. President Chirac has declared the law constitutional, but suggested that the period be reduced to one year.
Derek Lowe has picked up on this. It's a funny thing, but when American commentators hear about labour issues in Europe, they nod sagely and say, "Ahh. Old Europe. Socialism. Doesn't work, does it?". He hasn't actually gotten the point that the students in France aren't pissed off about the fact that employers can fire staff in the first two years of their jobs (they always could), but that they can fire them without reason and on reduced notice. This is not good. I'm all in favour of labour flexibility, but under CPE if your boss simply doesn't like you (or makes a pass at you which you turn down) then you're out on your ear with one month's notice, thank you very much, goodbye with no recourse to a labour tribunal. Except that might have been the job you wanted to start your career. Doesn't look good on a CV, does it?
Several commentators have posted the usual anti-French/anti-Europe garbage too, which as usual flies in the face of actuality. The US economy is not in a good state. The fact is that the enormous and massive engine of commerce in the US has been running without sufficient lube for about 20 years, and it's simply momentum keeping it running. One day, the system is going to jam solid, and the whole thing is going jump off of its mountings and land in the laps of the smug US economists and politicians who abdicated responsibility and put the bankers in charge of the economy (which is like putting an alcoholic in charge of a brewery - they'll impress you by increasing beer production, but you're left wondering where all that extra product went).
The problems in France and Germany are simply that their economies are different to the US. France actually embodies some fairly basic capitalist principles which are no stranger to US companies : globalization (Toyota built its latest manufacturing plant there), foreign investment (40% of French quoted companies are foreign owned) and recent decoupling of private enterprise from the state. But France also has a progressive social agenda which the US lacks, and this is a source of some of France's woes. Its primary and secondary healthcare system is enormous and much-abused, and labour security has been a deeply engrained ethic.
Villepin's government is trying to reduce long-term unemployment. Unfortunately, the CPE law will simply create further uncertainty among an already uncertain graduate labour market, shift power into the hands of unscrupulous employers and make it harder for the best students to find the best jobs.
The situation is Denmark is interesting, and one which 99.99% of US commentators neglect completely. Socialism in Denmark is a reality, perhaps more so than in France. Healthcare, education and public transport are funded by the hefty taxes levied, and it has been that way for a long time. As in France, there is considerable resistance to changing the system. Even under perhaps the most rightwing government ever to take office, there is little stomach for deregulating any of it. There have, admittedly, been reforms in healthcare, education, employment and taxation, but compared to, say, Thatcher in the 80's, these are as nought.
And I hope it stays that way. I share that wish with the Economist Intelligence Unit who have recently ranked Denmark as having the number one business climate in the World between 2006 and 2011.
I love things like this - it completely confuses libertarian economists who cast around for mitigating factors - maybe Denmark is too small, too special, too strange. The fact is, it's a good political and economic model, carefully cultivated over a hundred years of democratic debate (with a small interruption between 1939 and 1945). The Danish political system is based on proportional representation, so anyone who has a view can find a voice in parliament. Union/employer relations are stunningly cordial. That's not to say that there aren't disagreements or strikes (and sometimes the strikes are annoylingly unplanned) but broad employment conditions and salary levels are discussed. This is because Danish students are encouraged from an early level to participate in decision making. High school kids here are often highly socially engaged, and this engagement follows them through to university and into the workforce. It's hard to feel dispossessed by society when you've been taking an active part in it virtually since birth. Danish businesses do fairly well here - Novo Nordisk, Mærsk, LEGO (OK, they have problems), Arla, B&O. And the biotech/biomedical sector here employs 40,000 people. Not bad for a small country.
Of course, there are exceptions and problems and things that don't work. But the impression one gets is that the Danes have spent a long time trying to get a holistic system together and have for the large part succeeded.
It makes me nervous when politicians start talking about making wholesale changes, and it makes me depressed when US commentators start talking about things they know nothing about. I hope the French government goes back to the drawing board on this - and that Dansk Folkeparti don't start getting ideas.
Posted by daen at April 1, 2006 12:00 PM