Monday, June 11, 2012

France Will Tighten Rules on Layoffs

The new government plans to make it more difficult and expensive for firms to lay off workers. "The main idea is to make redundancies so costly that it's not worth it," said Michel Sapin, the new labor minister. I'm no neoliberal apologist, but I think this is a terrible idea. France needs to improve its competitive position in the world. It has too many workers in declining industries and too many plants that are suboptimal in size and technology for today's markets. It's wishful thinking to believe that this can be combated by fiat, but the government is apparently sufficiently desperate about rising unemployment numbers to resort to a measure that is likely to worsen the situation in the medium term, even if it prevents further losses for a few months or years. Perhaps Hollande is less of a centrist than I thought he was, or perhaps the balance of forces within the party is not quite what I believed.

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