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Sleepless in Fulham: Rambling and gambling by David Young
Saturday, 5 November 2005
France kicks and screams.
Topic: Politics
A few months ago, I wrote a piece titled 'When is it time to forgive France?' in which I argued that France could serve a useful role as a warning to others when its 'social market model' collapsed.

I had no idea that the French were in such a rush to take me up on my suggestion though! For nine consecutive nights there has been rioting. Last night police made 250 arrests. Nine hundred cars, one school and two nurseries were burnt.

It doesn't help calm matters that the rioters are mostly muslims from North Africa. But whatever the effect of Islamism, the chief blame lies in the country's employment protection laws. By making it hard for companies to shed workers, they make it less likely that the unemployed get into the labour market in the first place.

Any French company considering its headcount budget has to take into consideration the difficulty of making people redundant if it later needs to. Therefore in order to avoid the risk of expensive overmanning, it must plan its recruitment targets on the basis of a worst-case scenario. This wouldn't happen in the UK, where companies would hire more people in the first place, knowing that they could lose them later if they had overestimated their personnel needs.

It's a classic case of unintended consequences. Laws that are supposed to protect workers end up preventing people from working in the first place. And who suffers the most from this? Mainly it's the North Africa immigrants who find it hard to get their first job. The high unemployment gives them time on their hands, as well as rage in their hearts. It's been a disaster waiting to happen.

I'm not sure that most people in the UK realise just how high unemployment in continental Europe is. It's been high in Spain, Germany and France for well over a decade. In some regions for two decades. In Britain, we all remember the high unemployment of the early Thatcher years. However awful that was for many, it was shortlived compared to the unemployment that Europe has experienced.

Now that the rioting has entered its second week and has spread to other cities, will the French wake up out of their slumber and make moves to reform their labour markets to get industry hiring again? One can only hope. But I fear that the French are too proud to admit that their 'social market' is in fact profoundly anti-social and has exacerbated ethnic tensions to breaking point.

Tuesday, 8 November 2005 - 6:02 PM GMT


Three further factors in seriously protective labour laws:

1) They encourage the formation of black market labour forces, who have even less protection than they would under the most lax labour laws

2) They work in favour of the conservative unionised classes rather than the more radical entrepreneurial classes.

3) They discourage evolution of society, causing it to "freeze" in a particular form. So, to take an example from Britain's past, the Enclosure laws were a pain at the time, but, in Benthamite terms, they did the English a lot of good.

Even in Britain I would not dream of starting up a business, solely because of the aggravation entailed in (legally) employing people. If the rules were less strict, I might consider it. So, in that sense, it's a loss to the GB economy and workforce.


PJ

Wednesday, 9 November 2005 - 2:10 PM GMT

Name: David Young

Points 1 and 2 I completely agree with.

I don't understand point 3. Can you elaborate?

DY

Wednesday, 9 November 2005 - 6:29 PM GMT

Name: Peter B

Companies are organic. New ideas require new companies (see Microsoft in 1970s, Google today, for good examples). New companies tend not to form in countries where the labour laws make it impossible to fire the wrong guy and hire the right guy.

When was the last radical new-idea company that came out of a country with seriously restrictive labour laws? What we get from these countries is old companies trying to develop new ideas. It doesn't work.

Pete

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