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.


James C. Brown said...

This is good news for people who have jobs already. But for those out of work,or who want to leave current jobs, or young & recent graduates, expect the same old, same old precarity -CDD, internships, apprentissages...and company's freezing new hiring in France while they expand abroad. Basically, whatever it takes to get to get around strict labor laws. No change there. On the jobs front, Hollande promises to be as bad as Sarkozy? He should take a close look at why Obama's sweating balls, and why the majority of 20yr olds voted for Walker in Wisconsin.

Anonymous said...

It's actually not clear this is such a bad idea. After all, Sapin's sentence acknowledges that firing by firms is the result of some form of optimization. It may be that he only plans to penalize financially firings so that firms take into account the social costs of firings (training, relocation, etc.).

This is a very different logic from the current labor law where it's actually judges and not managers that decide what is a good firing and what is not.

Penalizing firings financially has also been suggested by Olivier Blanchard and Jean Tirole (albeit in common with a serious thinning of the labor law...).


Art Goldhammer said...

Ah, well, if that's the logic, Laurent, then I stand corrected. We'll know when we see more details. I agree with the Blanchard-Tirole analysis, but I thought French firms already paid substantial costs when laying off.

Anonymous said...

Well, let's just say I hope this is what Sapin has in mind.

I just remember that in one of the primary debates, Royal opposed one of Hollande's ideas of taxing firings more, on the grounds that one should not let managers be able to "pay off" their firing decisions, and advocated for more power to the judges. At the time, Hollande stood firm.


Anonymous said...

The stupidity of these kinds of decisions is impossible to explain, defend or justify. Fewer companie will hire, raising unemployment.