[lit-ideas] Re: Are you out there, Didier?

  • From: "Lawrence Helm" <lawrencehelm@xxxxxxxxxxxx>
  • To: <lit-ideas@xxxxxxxxxxxxx>
  • Date: Fri, 31 Mar 2006 07:19:10 -0800

Teemu,

 

Iâm not sure there is a âreputable academic foundationâ for any of this.  
My foundation is my own experience in the American work force as well as 
anecdotal accounts from fellow workers.  Over here an employee must prove him 
or herself before he is âkept on.â  It is understood that both he and the 
company must do well for his job to have any longevity.  Over here the emphasis 
is on jobs provided by the entrepreneur rather than on a worker who must have 
secure employment.  It seems to me the French and anyone else with an 
equivalent system has it backwards.  The rioters want a guaranteed permanent 
job right out school.  That process seems to put the emphasis in the wrong 
place if a nation wants a successful economy.  The arguments in your article 
seem to suggest that the way we do it over here in the U.S. would never work.  
Weâre even worse than Villepinâs proposal.  We never guarantee permanent 
employment except in a few notorious instances like education and Longshoremen. 
 Elsewhere it is merit and competition â at least it is supposed to be.  
Employers who use some other criteria usually donât hold up well against 
opposition that emphasizes merit.

 

The Japanese had a system similar to the one they had in France. They had a 
term for those who turned out to be incompetent.  They couldnât get rid of 
them because they had job security so they gave them an office with a window 
and their jobs involved nothing so they came to work every day and stared out a 
window.  I believe the term, not an official term of course, was something like 
âWindow Watcher.â  In recent years, however, they have learned the beauties 
of being able to lay people off.  They learned that they couldnât compete 
well enough if a portion of their work force wasnât able or willing to do the 
work.

 

Villepinâs idea seemed good to me: give employers a chance to see if an 
employee was able and willing to do the work before making his job permanent 
â not very socialistic of him, I suppose, but maybe he was trying to improve 
the French economy.

 

Lawrence

 

 

 

 

 

 

 

-----Original Message-----
From: lit-ideas-bounce@xxxxxxxxxxxxx [mailto:lit-ideas-bounce@xxxxxxxxxxxxx] On 
Behalf Of Teemu Pyyluoma
Sent: Friday, March 31, 2006 3:28 AM
To: lit-ideas@xxxxxxxxxxxxx
Subject: [lit-ideas] Re: Are you out there, Didier?

 

Didier is propably busy with something else, so I'll

explain Lawrence that it isn't that simple. May I as

usual offer Financial Times, one of the very few

English language papers that does a good job at

covering EU and Continental Europe, that is goes

beyond the trendy pseudo-explanations. Wolfgang

Munchau writes (pay wall free at

http://www.business-standard.com/ft/storypage.php?&autono=220190,

comments in bracket mine):

 

"As far as I know there exists no reputable academic

foundation for Mr de Villepinâs specific proposal â a

work contract that removes employment protection for

the young, while leaving it fully in place for the

old. There is some consensus in the labour market

literature that excessive employment protection can

lead to high unemployment among certain groups,

including the young. But this consensus does not imply

the selective removal of employment protection for a

single age group. I would suspect that most labour

market economists would be on the side of the students

in this conflict.

 

"French youth unemployment is among the highest in the

western world. It has oscillated between 20 and 30 per

cent since the mid-1980s and is now at the lower end

of this band, but with no signs of a futher decline. 

[Others have pointed out that the number of young

people who are counted among job seekers, 20 to 30 per

cent of which are unemployed, is a tiny fraction of

the age group because most are students and as such

the figure is not that informative, overall about 8%

of young people are unemployed in France...]

 

"Tito Boeri of Bocconi University in Milan and Pietro

Garibaldi at the University of Turin argue* that Mr de

Villepinâs CPE accentuates the intergenerational

conflict between labour market insiders and outsiders.

They conclude that for as long as this conflict

persists, there will be no genuine labour market

reform.

 

"Olivier Blanchard, professor of economics at the

Massachusetts Institute of Technology and probably the

best-known French macroeconomist, has recently warned

in a much-noted paper [for a good discussion and

summary of what is the latest, refreshingly humble and

propably the best paper on European unemployment see

http://economistsview.typepad.com/economistsview/2005/11/blanchard_europ.html]

that we know a good deal less about the causes of

European unemployment than we think we do. While his

comments were not specifically addressed at youth

unemployment, they should serve as a warning to

politicians such as Mr de Villepin, who believe that

they have grasped the full extent of the problem.

 

"Blanchardâs own solution to reduce youth unemployment

in France, as he argued on another occasion, is for a

universal contract with phased protection according to

time spent in a company â the longer you work for a

company, the higher your level of protection. This

proposal would be less discriminatory than the CPE,

and would address the obdurate two-tier problem, under

which one set of labour market rules applies to one

group of workers, while another set applies to another

group.

 

"The two-tier labour market in France is the result of

a panoply of employment contracts â a standard

contract that offers an absurdly high level of

employment protection and various other types that

offer little to none. Mr de Villepinâs CPE is the

latest addition to the range. It has no time limit,

offers no protection at all during the first two

years, and full protection thereafter.

 

"The trouble occurs at the crossover point â for

example, when people try to move from a fixed-term

contract to a permanent one. Employers have no

incentives to offer their employees a permanent

contractual employment guarantee. This is why many

present fixed-term contracts end in unemployment,

rather than permanent work.

 

"The same problem also applies to Mr de Villepinâs

CPE. Whereas previously employers failed to turn

fixed-term contracts into permanent ones, they will in

future simply dismiss young employees at the end of

the two-year trial period. Instead of inventing yet

another type of employment contract, Mr de Villepin

should have reformed the employment protection for

existing labour agreements. That would have had some

effect on employersâ incentives to take on young

people after a trial period. Under Mr de Villepinâs

CPE, young people start their careers in a US-style

hire-and-fire labour environment for two years, after

which they will either enjoy protection for life, or

become unemployed. This is absurd.

 

"Any serious reformer of the French labour market

would also at least have to address other factors that

might contribute to high structural unemployment, such

as the 35-hour week and the minimum wage, also known

in France as SMIC, which is presently set at â8.03 per

hour. According to the Organisation for Economic

Co-operation and Development, 13 per cent of French

workers were paid the minimum wage. It represents

about 60 per cent of the median production workerâs

wage. These data suggest that the SMIC may have been

set too high.

 

"As a serious instrument of economic reform, Mr de

Villepinâs CPE is too one-sided. Its net economic

effect may well be negative, if you take into account

the loss of economic output from tomorrowâs strike,

and other disruptions caused by the recent mass

demonstrations. This is bad economics and bad

politics. Mr de Villepin is not a tragic hero who is

sacrificing his political career for the greater good.

He is simply a politician who bungled one of the

biggest reforms in modern French politics."

 

That is a very long way to say that supposedly leftist

NY Times for example hasn't got a clue.

 

 

Cheers,

Teemu

Helsinki, Finland

 

--- Lawrence Helm <lawrencehelm@xxxxxxxxxxxx> wrote:

 

> I wonder if Didier Agid is lurking.  If so, perhaps

> he would come out of

> lurkhood long enough to comment upon politics by

> street riot. Villepin's

> proposal that companies have the right to fire

> employees under 26 with less

> than two years experience seems a very small step,

> but in the right

> direction.  And then the students take to the street

> to protest this

> proposed loss of this entitlement.  That's rather a

> bad thing for them to be

> doing, don't you think, Didier?  

> 

>  

> 

> And does it seem that Villepin is being so

> reasonable because Sarkozy is in

> the wings ready to be even more reasonable?

> 

>  

> 

>  

> 

>  

> 

> Lawrence

> 

>

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