Thursday, January 25, 2007

French jobs in the balance



Today has been marked by two very different views held by Socialist Segolene Royal and UMP candidate Nicolas Sarkozy over the issue of jobs, unemployment, and rigid French labor laws.

Currently France has something known as the CNE contract, which allows for small businesses to hire someone for a two year trial period. This allows firms more risk in hiring, as well as an employee evaluation time before larger social charges would kick in. Nicolas Sarkozy has declared his strong support for the law, and indicated that he would work to extend the trial period: "The CNE is progress. We must not touch it." Sarkozy's position has also gotten the support of Medef, France's main business federation.

"We just need to change some parameters: A bit more freedom, a bit more air and all will improve immediately in France. And everything will improve for the French. I find it strange that one wants to abolish a type of hiring, which has created 45,000 jobs in nine months, which would not exist otherwise."

Royal has expressed a sharply contrasting opinion. Stating that "the model of economic insecurity that the right is proposing is pulling France downwards," Royal wishes to scrap the law altogether.

Although this type of contract may not be perfect, I think most objective economists would agree that France needs to liberalize its labor laws if it is to reduce unemployment and compete better in the global economy. This leaves two bad options. Either Royal wins, and brings the French economy one step backward, or Sarkozy wins, and faces paralyzing protests such as those that thwarted PM Dominique de Villepin's youth labor law last year. Lets hope that Royal finds a more pragmatic touch, and Sarkozy a more conciliatory demeanor.

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