It’s become a rather amusing cliché that France would always prefer revolution to reform but once again this seems to have been the case. Despite M. de Villepin’s courageous attempt to stand firm in the face of student riots, strikes and street violence across his nation, M. Chirac yesterday led the climb-down of his government over the contested CPE, or youth first employment contract.
Let’s be clear about what the CPE proposed to do. France has enormous employment problems. It suffered a burden of 9.6% national unemployment in 2005 as opposed to Britain’s just over 4%. Added to that is the problem of 42% long term unemployment where unemployed workers could not find a new job within 12 months – again double the percentage of the UK. These statistics become even more acute amongst youth workers. In September 2004, 21.7% of 15-24 year olds were unemployed, a figure which rises to an astonishing 40% in some regions and which is largely blamed for the riots at the end of last year. The CPE attempted to combat these figures and their crippling social effect by adding flexibility to France’s ‘one-job’ oriented labour laws and allowing employers to terminate the contract of 18-25 year olds without warning within the first two years of their employment. Although there are obvious dangers to the legislation, when you consider that a quarter of dismissals in France are contested in work tribunals lasting an average of 30 months, you can see the reasoning behind it as an incentive to encourage employers to hire youth workers.
The climb-down of M. Chirac et al marks much more than the rejection of a single piece of employment legislation. It is a solid blow against reform of Europe’s antiquated and collapsing social economies. European nations have long memories and the chances of any further attempt at reform in France prior to the 2007 elections are almost zero. Nicholas Sarkozy, the French interior minister and reformist would-be candidate for the centre-right, distanced himself from the reform as opposition grew and the IHT has a quote from a senior advisor of the French Finance Minister, Thierry Breton, commenting on Sarkozy’s movement from a reformist to a centrist position. If this is indeed the case then those that hope that 2007 will be a decisive year in European economics which will see a mindset more focused on the need for reform, will be sadly disappointed.
Open Europe yesterday released their new book “Beyond the European Social Model”, which contains fresh batch of pan-European commentary on the need for economic reform to prevent further stagnation within the majority of European labour markets. Perhaps someone should post a few thousand copies of it to the students in the Sorbonne. With the French job market showing no signs of future improvement, they will have plenty of time to read it.