Kurzarbeit in France's Future

One little-noticed point in Hollande's interview with Claire Chazal was his mention of la possibilité "de recourir au travail partiel en cas de période difficile." In other words, what the Germans call Kurzarbeit, or sharing of available work hours among workers in order to avoid layoffs in hard times. There are multiple ironies here: Sarkozy tried to extend overtime hours by exempting employers from taxes on them, a reform that Hollande has canceled. The Right has blamed the 35-hour week for everything wrong with France from the economy to the decline of the baguette, but now even further working-hour reductions may be deemed necessary in an emergency. And at this point the implementation details remain vague: who will determine when time-sharing is permitted; how will hours and wages be allocated; how might firms adapt?

2.3 Billion for Youth Jobs

Employment subsidies: Hollande has just announced 2.3 billion euros' worth. The money is earmarked for underskilled youth in the 16-25 age group. We have been this way before. The move is billed as a boost to French competitiveness, since it will reduce labor costs in some industries. But actually it doesn't reduce costs. It only transfers the costs to the state, meanwhile discouraging industry beneficiaries from investing in new, labor-saving technology to reduce costs over the long run while spurring employment among manufacturers of capital goods. In short, this is a bad investment. To be fair, youth unemployment is quite high, and this will provide some immediate relief. But similar measures have proved disappointing in the past, and there is no reason to think that this time will be different.

The Call Center Controversy

The "optics" aren't good, as the saying goes: Ile-de-France Transport outsources its call center work to Morocco. One might have expected this from the efficiency-minded Right, but the Left? If the government can't keep government jobs at home, what jobs can it keep? I'm a wet social liberal, but this decision is a bit startling and seems a tad on the penny wise, pound foolish side.

I see Montebourg is on the case, but then again, what case hasn't he been on since he took office. His ubiquity reminds me of Sarkozy's as interior minister.

Well, at least this flap takes people's minds off Ségolène Royal's gaffe--or was it speaking truth to power--in saying that Najat Vallaud-Belkacem owed her job to her ethnic background. It would have been more gracious to say she owed her job to her good looks, but perhaps Royal had reasons for not going there.

PSA Closure, Montebourg, etc.

With the news that PSA will close its Aulnay plant, I refer you back to this earlier post of a little more than a year ago. You may recall that, at the time, the union claimed that PSA was going to close the Aulnay plant, but the company said that the documents obtained by the union were only contingency plans. Besson and Fillon called in PSA executives and received "assurances," Fillon said, that the plant would not be closed.

Undoubtedly, as I wrote at the time, the plans were well advanced, and the only "assurance" Fillon received was that the plant would not be closed before the presidential election of April-May 2012, which would have been a major embarrassment to Sarkozy, since the state had subsidized PSA during the crisis. Is it any wonder that "trust" among the French social partners is low, given this record?

On the other hand, is it any wonder that PSA is outsourcing its auto assembly, as I also wrote at the time? French unions, unlike German, Spanish, and Italian unions, have been unwilling to make changes in work rules and to adapt to the changing scale of auto production around the world. And the trade figures have reflected this. As I have also repeatedly emphasized, French auto imports have been increasing. This category is one of the most alarming trouble spots in French trade data.

So there is plenty of blame to go around here. The ball is now in Arnaud Montebourg's court. hew ill be on TV tonight, and on July 25 he will announce a "support plan" for the French auto industry. But realism is in order. The government cannot alter global realities in the auto market by fiat (no pun intended, even if Fiat has been more pro-active in this area than French firms). Nor can the unions expect the new government, merely because it is of the left, to respond to their understandable grievances by granting them all their wishes. Change is required, and change cannot be expected to be rational, or to succeed, if the parties distrust one another so deeply that essential information is concealed. This whole episode has been a sorry one in French industrial relations. Let us hope that Montebourg draws the correct lessons from the previous government's egregious mishandling of the situation.

Real Wages Decline in France and Germany

Reported here.

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.

More interesting employment data

Here.

Precarious Employment Mostly Affects the Young

According to this study:

Répartition de l'emploi selon le statut et selon l'âge Unité : %
	15 à 29 ans	30 à 49 ans	50 ans et plus		Ensemble
Ensemble	100	100	100		100
Non salariés	4,5	11,5	16,9		11,5
Salariés	95,5	88,5	83,1		88,5
Dont salariés en contrat à durée indéterminée	63,2	80,8	77,6		76,4
- du privé	53,9	62,7	57,0		59,4
- du public	9,4	18,1	20,6		20,6
Salariés précaires	32,3	7,7	5,5		12,1
Dont intérimaires	4,2	1,5	0,7		1,8
Dont apprentis	6,7	0,0	0,0		1,4
Dont salariés en contrat à durée déterminée	17,3	5,2	3,9		7,3
- du privé, hors contrats aidés	12,1	3,3	2,6		4,9
- du public, hors contrats aidés	5,2	1,9	1,3		2,4
Dont stagiaires et contrats aidés	4,0	1,0	1,0		1,6
- du privé	3,0	0,6	0,5		1,0
- du public	1,0	0,4	0,5		0,6
Source : Insee, enquête emploi en continu 2010, Population active occupée.