France Nears Economic Shutdown

All of the unions in France are threatening a massive strike that will shut down public transportation, police services, schools, and many major businesses. The reason is that the government, in an effort to spur economic growth and employment, are trying to pass a few reforms to ease some regulations on businesses. Here’s what the government is considering:

  • The 35-hour week remains in place, but as an average. Firms can negotiate with local trade unions on more or fewer hours from week to week, up to a maximum of 46 hours.
  • Firms are given greater freedom to reduce pay.
  • The law eases conditions for laying off workers, which is strongly regulated in France. It is hoped companies will take on more people if they know they can shed jobs in case of a downturn.
  • Employers to get more leeway to negotiate holidays and special leave, such as maternity or for getting married. These are currently also heavily regulated.

Why is the government trying to spur the economy? Here are a few glimpses of the French economy:

  • 0.5% economic growth last quarter
  • 10.2% unemployment – 25% for¬†people under 25
  • Public sector accounts for 57% of GDP

And these aren’t unusual statistics. The stagnant growth and unemployment are persistent.

It will be interesting to watch how France goes. Apparently, many French like their economy this way. If you’re a 55-year-old Frenchman¬†with a job, why wouldn’t you? It’s almost impossible to get fired, you only work a maximum of 35 hours a week, the pay is good, and the public services are good. What do you care about the 20-year-old who can’t get a job or general economic performance? You got yours. For now.