Tuesday, April 11, 2006

Chirac does what he does best - surrender !!

After weeks of car burning and car smashing mayhem through the streets of Paris, French President Jacques Chirac has backed down over his proposed youth jobs reform. Rather than get police to actually stop the young hooligans and rioters, the French authorities have capitulated:

IN an abject capitulation to the power of the French street, President Jacques Chirac has thrown out a youth jobs reform that sparked months of strikes and violent protests and closed down schools and universities across the country.

The humiliating backdown, in the face of union and student threats of another general strike, dealt a severe blow to Mr Chirac's faithful Prime Minister, Dominique de Villepin, the architect of the First Job Contract (CPE).

The modest reform to France's rigid labour laws aimed to reduce the record high youth unemployment rate of 23 per cent, by making it easier for employers to fire younger workers in the first two years.

The socialised labour market in France is far worse than anything we have yet to experience in Australia. Their existing labour laws protected all youths and university graduates in their first jobs for 2 years. The idea behind it was to get young people to start a career and for employers to "give them a chance" for at least 2 years !!

But it led to scenarios where it was near impossible to fire incompentent and lazy young workers in their first jobs, so employers eventually wised on to the fact and were a lot more reluctant to employ youths. I don't know who invented the French socialised labour laws, but they clearly weren't aware of the perils of this legislation. When you introduce regulation to make it difficult/impossible to fire young workers, then employers associate a much larger cost with hiring young workers and therefore are much more reluctant to do so, hence the 23% unemployment.

It's like those late night TV commercials trying to sell mobile phone ringtones for $5. Now $5 isn't expensive, many young teenagers would be happy to try it out, but after widespread stories of how mobile phone owners were billed $5 every fortnight after signing up, and how it was difficult to back out of the contract, a lot more people are reluctant to ever SMS for a new ringtone now.

The second problem with these laws is that they create a dependency. Its just like welfare. People depend on the regulation to protect them because they are too lazy or incompetent to go and find gainful employment on their own. So we've seen French students riot and burn hundreds of cars in anger at the mere prospect of losing their government protection.
Tristain Rouquier, the head of the high school students union, said he was "very satisfied" with Mr Chirac's backflip.
Yes. The French are always satisfied with retreat and surrender.