During the period from 1980 to 2000, only two OECD countries, Germany and Greece, recorded slower growth in income per capita than France. But Germany had to go endure the huge costs and trauma of reunification with East Germany. Greece was hurt by the wars in the Balkans. What's France's excuse?
Second, whatever growth there is in France does not trickle down to the poor. Many young second-generation immigrants are virtually excluded from the labour market. Average unemployment has been stuck at around 10% for several years, one of the highest rates in the OECD. But the unemployment rate is more than double among the young. And it reaches 40% and over among those who drop out of school in the banlieues, which have become no-go zones of hopelessness.
Unemployment is high and concentrated among French minorities because of specific labour-market institutions. France has strict hiring and firing regulations that make it costly to dismiss workers and thus reduce job creation. Those with a job are protected, those without one are hurt.
Moreover, salaries cannot fall below a legislated minimum wage, which is so high that the least productive and least skilled workers remain shut out. Wages are set in centralised negotiations by monopolistic unions, and apply throughout the economy. But the unions don't care |