Not The Way Forward
French Socialists Kiss Big Business, Kick Small

Last week, France’s socialist government was on the verge of enacting badly-needed labor reforms, measures which analysts say would have boosted smaller businesses. Then, after a day of street protests and emerging fissures in their ranks, the socialists buckled:

Manuel Valls, prime minister, said on [March 14] the jobs bill would no longer cap the amount judges can ask employers to pay in case of wrongful dismissals. Unpredictable and at times very high payouts are currently a source of legal uncertainty for smaller businesses, deterring them from hiring employees on permanent contracts.

The government has also withdrawn a provision intended to allow small companies without union representatives to strike deals with their employees on working hours.

The bill is not dead, however. It was rewritten to favor France’s larger companies:

If adopted, the law would facilitate redundancies at French lossmaking plants. Currently, French judges can oppose lay-offs if the parent company, even if based abroad, is profitable. In the new draft, a French subsidiary can cut jobs if its revenues have fallen for four consecutive quarters and if it has posted operating losses for two quarters. Judges would only verify the accuracy of the financial statements and no longer delve deeper into the reasons.

Companies large enough to have union representatives would also be able to negotiate deals to work longer than the 35-hour weekly threshold. In case of a deadlock, chief executives would be able to organise referendums to let employees decide. To do so, they would need the consent of unions representing only 30 per cent of the workers.

France needs to promote small business, start ups and the culture that goes with them if it is to build an economy for the digital age. So far, it seems to be moving in just the opposite direction.

Whether you are a socialist, ‘neoliberal’ or pragmatist in Europe today, the health of small business should be at the top of your priority list. This is the sector that creates jobs, that brings young people and the unemployed back to the labor force. And this is the sector that, over time, will generate the wealth and the know-how that keeps your economy from turning into a collection of slow-moving, state-dependent crony capitalist ‘renterprises’ that only prosper because of tax breaks and other political favors.

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