Sunday, April 24, 2005

France, the Land of McJobs?

On May 29, the French will vote to ratify or reject the European Constitution, and it appears likely that they will reject it. Polls show the no vote leading by a small, but growing, margin. The European Union could shrug it off if one of its smaller members rejected the Constitution, but no one knows what to do if an important country such as France or Germany rejects it. If either France or Germany left the E.U., the organization would almost certainly collapse.

A large segment of the French populace no longer shares its government’s enthusiasm for the European Union. French unemployment now exceeds 10% and continues to climb, whereas the United Kingdom’s unemployment has been hovering around 5%. Although the U.K. is part of the European Union, it has refused to accept many of its policies including its common borders and its currency, the euro. To some people in France, the U.K.’s decision to deal with the European Union at arm’s length appears to have been a wise one. The U.K. is certainly fairing better than France.

In reality, France’s unemployment and poor economic growth are not only caused by its membership in the E.U.; France has severe structural problems in its labor market, as well, and there is no will to correct them. The cost of employing a French worker is very high. Permanent employees in France enjoy a high minimum wage, lay-off protection, and a 35-hour workweek. As a result, French companies are hiring fewer permanent workers and are relying on temporary and part-time workers. In Germany, employers are going even farther and are contracting labor out to service industries with offices in Eastern Europe who often pay their employees slave wages. Soon, those contract workers could also be cleaning rooms in French hotels and cutting meat in French processing plants. Both France and Germany are becoming countries that offer most of their citizens McJobs while a shrinking portion of the population has full-time work with extravagant benefits.

France’s response to its unemployment problem has been to come up with stopgap solutions rather than to make the French worker more productive. The country plans to increase its apprenticeships by 40% to 500,000 a year by the end of the decade and to offer one million welfare recipients job training and subsidized jobs. Apprenticeships are unlikely to help unless there are genuine jobs available to those who finish them, and subsidized jobs, while preferable to welfare, do little to make a society competitive. If it comes up with no better plan, France is sure to keep losing ground

With members of the European Union falling to keep economic pace with the rest of the industrialized world, it is understandable that French workers, especially younger French workers, are leery of the European Constitution. If they reject it, could they later reject the European Union itself and the euro? I don’t know the answer to that question, but I hope that it is no.

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