Letter from France #1: France and the Future of Employment

The French have taken to the streets again, with students, laborers and trade unions demonstrating to complain about a government initiative to make employment more flexible. While these demonstrations, and the violence that inevitably follows them, makes for good television, they mask a more serious problem, one that the French need to understand. The country is no longer able to face the challenges of today, let alone the future, and France’s youth has given up hope.

Whether these demonstrations are in part fueled by political posturing, as the current prime minister prepares for next year’s presidential elections, or whether the students are being manipulated by labor unions concerned about losing entitlements, the situation has become dire. Anarchists routinely follow the demonstrators, vandalizing stores and burning cars amidst powerless police. Worst of all is the neo-fascist attitude of many university students who, in blocking universities as part of their "strikes", and preventing classes from being held for several weeks, refuse to allow a vote on these strikes. More and more university students are trying to get back to school, so as not to miss final exams, but these so-called leftist students, exercising what they see as their right to strike and demonstrate, don’t want to see the excercise of democracy.This is in line with the standard concept of French strikes and demonstrations. For more than two decades, each time a government has attempted to make structural reforms in France, people have gone to the streets, and the government has backed down. Eschewing basic democratic principles, demonstrators assume that getting a few hundred thousand people in the streets will lead to change. Unfortunately, governments, afraid of "May 68" type civil unrest, give in every time, providing demonstrators with the certainty that the next time, things will happen the same way.

The current demonstrations are about a new labor law that will allow employers hiring youths (under 26) to terminate their contract at any time in the first two years. While these employees will have more unemployment benefits than under standard long-term contracts, the students are saying that this new contract is another step toward "précarité", the current buzz-word for non-lifetime employment. Rather than accepting that a job is better than unemployment (people under 26 have unemployment around 22%), they constantly underscore the fact that, with this new contract, it would be harder to get a mortgage or car loan; as if all they want out of life is a new car or a house, and don’t consider their jobs and the experience they’ll amass to be important.

The French have a curious relationship with work. Recent polls have shown that some two-thirds to three-quarters of French youth would prefer a cushy civil servant job, guaranteed for life with good retirement benefits, over other options. While there are entrepreneurs in France, they remain under the radar, and a majority of French university students would never consider taking the risk of starting their own businesses. This suggests that an entire generation is averse to taking risks; not only do they want an iron rice-bowl as soon as they start working, but they don’t want to take chances creating businesses and having more control over their lives.

Yet the backbone of any industrialized nation is small businesses and independant contractors. Even in France, the country that invented bureaucracy, there is a solid fabric of small businesses. Yet these businesses are over-taxed, and taxes progress by levels, meaning that at a certain amount of net income, the taxes increase in a huge leap. Many such businesses and independant contractors don’t want to work more, or make more money, because of their tax liabilitiy. If the French government wants to make a difference, they should start by reducing payroll taxes, especially to small businesses, and allow these employers to hire more easily, with less tax liability.

There’s a trade-off between the tax rates in France and the social safety net. I, for one, am much more secure paying for decent, state-run health care than the second-world equivalent that is the norm in the United States. But retirement benefits, which are among the highest taxes for independant contractors, are unlikely to net very much when I reach retirement age. Add to that a bevy of obscure taxes, many of which were supposed to be temporary when introduced, and the total tax liability is stifling.

France needs to incite more people to take the plunge and start their own businesses. They need to develop more partnerships between universities and businesses so students are not secluded from the world of work, and have a better understanding of what business is about. But above all, they need to teach a generation of complacent youths that it’s time to get up and start working. Not everyone can have that coveted civil-servant job, and competition means that the majority of students who seek an undemanding life will not find it. Perhaps French youth need hope and curiosity more than anything; perhaps the French government needs to give this to them. The future is only what you make it, and, for now, these demonstrators are desperately clinging to the last remnants of the past.