ARC's 1st Law: As a "progressive" online discussion grows longer, the probability of a nefarious reference to Karl Rove approaches one

Tuesday, July 26, 2005

"Reform" en français = faible

The International Herald Tribune has this story on "radical" reforms of French employment law:

French law would make firing easier
By Thomas Fuller International Herald Tribune

PARIS Put aside for a moment criticism about torpid European governments and their reluctance to adapt to an increasingly competitive world: France, home to the 35-hour workweek and thick layers of social protection, is hatching a minor revolution in its labor policy.

The government of Prime Minister Dominique de Villepin is proposing a law that would allow certain companies to skirt existing dismissal procedures and more easily fire employees during their first two years on the payroll. The new rules, scheduled for discussion by the French cabinet Tuesday, are to take effect in September, a remarkable timetable given the typically languid summer months.

The rules have been scorned by labor unions, which view them as eroding job security, and pilloried by the opposition Socialist Party because of the way they were passed - via decree, as opposed to traditional parliamentary procedures.

But Villepin is sticking to his guns, saying the legislation is necessary to curb unemployment, which stands at 10 percent in France and at about 9 percent in the European Union over all.

The easy-to-fire law, which would apply only to newly hired employees, would be a closely watched experiment for Europe. It might help answer the question of whether making it easier to get rid of employees - as is the case in Britain, Denmark and the United States - actually encourages companies to hire more people in the first place.

Five other employment-related decrees in the same package would make it easier for small companies to hire young people, to streamline paperwork and to remove age limits for civil service jobs.

Firing someone in France today is, as in many other European countries, a difficult, lengthy, multistep process. Employers' associations have complained for years about the bureaucracy involved in firing or laying off employees. Workers, on the other hand, treasure the security that the system provides.
The new rules would apply only to companies with fewer than 20 employees, which today covers about a third of the work force. France's main employers' organization is already urging that it be applied in the future to a broader spectrum of companies.

Yet among human resources managers, there is skepticism. Bernard Brunhes, the founder of an eponymous consulting firm in Paris, called the law "marginal." He said, "I don't think this was generally received in the world of human resources as a very positive thing."

The government, he said, missed a good opportunity for a more comprehensive reform of the labor code. "Why are small companies hesitating to hire?" Brunhes said. "Not only because it's difficult to fire.They are hesitating because it's complicated, the paperwork, the social security system, the taxes."

Decades of legal tinkering have piled on provisions to the 2,300-page labor code, including laws that are obsolete, Brunhes said.

"We are used to seeing new governments every year or two rediscovering the problem of employment," Brunhes said. "I think it would be a lot more efficient to totally wipe out the labor code and start over."

Yann Duchesne, managing director in Paris of the private equity firm Doughty Hanson, and author of "France S.A." - which translates as France Inc. - said the new law was "cosmetic."

"My guess is that this will have a positive psychological impact on some people," Duchesne said. "But it will only have short-term impact."

Villepin's approach does nothing to address things like France's high tax burden, which surged to 46 percent in 2000 from 34.5 percent of gross domestic product in 1972, according to Duchesne.

Villepin defends the decrees as the "last chance to save the French social model." Meanwhile, French labor unions say they will defend the social model in their own way - by hitting the streets in September.

Such boldness!!! Recognizing that the current system doesn't work and reforming the laws for only the smallest of employers. You can bet that if a company has 21 employees, the mgmt is kicking off the process right now to fire the 21st employee so it can fall under the cap.

If this minor change is the "last chance" to save La République, I fear that even the French leadership doesn't grasp the extent of their problems. Labor mobility is key for France (and the EU) to succeed. (It's also critical for our success, but that's a post for another day!) Unfortunately for France, even the "right" does not understand the forces of the free market.

Your Co-Conspirator,
ARC: St Wendeler