firmly in place has been confirmed through an abundance of historical evidence.
What to learn from France's current labor reform
France is going through a period of great tumult at introduction of the First Employment Contract. The country's tertiary students have refused to attend classes, and labor unions have called for the general strike in order to block the law from being adopted. The central idea of the proposed law is to allow employers to fire workers under 26 years old within the first 2 years freely. This extreme measure taken by the French government to relax the labor market rigidity can be seen as an act of desperation in the midst of the dismal prospective that an unemployment caused- national- crisis is just around the corner after a series of labor policy failures.
Although France might be thought of as a cultural capital, the nation is pestered by grave socio-economic problems. Its economic growth is at low 2 %, lagging behind neighboring nations, such as Britain. With the unemployment rate over 9%, it has one of the highest rates among the OECD nations. Especially youth joblessness is up to 23%, and over 50% of the unemployed are long-term, meaning out of work for longer than one year. As jobs dry up, with a large number of permanently unemployed, only 25 million people work out of the whole population of 60 million in the nation.
As the job situation of Korea gets worse as years pass by, the labor reform process taking place in France does not seem irrelevant to Korea especially when France shares many similarities with Korea in the labor relations and employment regulations, and the former has had great impact in shaping Korea's labor policy. As in Korea, although the unionization rate in France is low, the unions are very powerful as they are embedded in larger public companies. Also antagonism between the larger companies and their employees is so ferocious that words 'collective bargaining' carry almost no meaning. As in Korea, France's labor movements lean far left, thus politically motivated strikes are often the case.
France has been regarded as a test ground for labor policies of Europe, especially since the socialist party took power in the 80's. The government then implemented policies imposing strict limitation on dismissal of employees and increased subsidies to the unemployed. These policies only aggravated the joblessness in the nation. In the late 1980's the government digressed from the existing policy to another in order to bring some flexibility to the labor market. The government of France then introduced the non-full time employment system and promoted contract-based, temporary and part time work, and companies received subsidies from the government when they took in the part of the population susceptible to lay offs --- Korea is following suit these days. These policies, contradictory to each other, only further distorted the labor market. In the 90's the French government introduced a policy of reducing working hours in order to increase jobs available --- one that played an important role in adopting the 5 day work week system in Korea --- but the result was reversed as the number of jobs actually diminished.
The lesson that Korea can learn from the French experiment is that government's precarious policy implementations are bound to aggravate the unemployment situation. France's vast 800 pages long labor code is an example that shows how much government intervention is being carried out in the labor market and relations in that nation. While the increased regulations might give a sense of broadened control to the public servants in supervising companies, both the employers and workers would find their life more difficult. Excessive government intervention through subsidies and restrictions in the labor market only leads to reduction in investments and hiring by companies. As globalization intensifies, this will be more pronounced as enterprises will move their production lines to other nations with better business environments.
The French experience also shows that anachronistic labor movements only will hurt the workers. The government of France is requesting only the 'powerless' youths to give up their job security while maintaining the vested interests of the unions because of their threat to the government with political actions and strikes. Although the unions are supporting the youth in opposing the First Employment Contract, they have no intention to give up their own prestige to increase job opportunities for the youth. Unless the government takes action and the unions agree to give up some of their share of rights, the fundamental problem in youth unemployment cannot be solved and job security will continue to be shaky.
Kim Tae-gi (Prof. of Economics Dept., Dankuk University)