Blindness of French labour laws

When I was recently on holiday in the South of France the

socialist government of Francois Hollande was obliged to

take the unusual step of by-passing democratic means of

getting his labour reform measures into law. He resorted to

the rarely invoked "executive power", to force through

changes in labour laws against the stolid opposition of those

on the left of his party and the labour unions - and in this

way he cut through a year-long impasse in the National

Assembly.

Left-wing fury was in evidence in the form of national strikes

and riots near us, in Montpellier, where police had to resort

to firing rubber bullets to restore a restive peace.

The law reforms sought by the government are designed to

introduce flexibility that will encourage employers to hire

more people, but the labour and student unions are

unmoved by what they see as an attempt to weaken worker

safeguards.

Why would mature students oppose reforms that will make

it easier for them to find jobs when they finish school? A

friend in the Languedoc has four daughters in local schools.

The children relate how their teachers keep telling them that

enterprise is bad because it engenders exploitation. It will

take exceptional children to resist this mass indoctrination

to open their eyes and ears, and see this pernicious

propaganda for what it is.

Penal employment taxes

During the same holiday in the Languedoc we spent time

with the owners of a flourishing wine-producing enterprise in the Muscat region. It engages hundreds of workers in the

vines during the picking season, all of whom are happy to be

self-employed and therefore do not have standard

employment contracts. The owners told us that the cost of

taking on workers as "employees" would be prohibitive

not because the wages they demand are too high, but for two

other reasons.

First, the application of exorbitant employment taxes,

insurances and other surcharges of various descriptions. To

illustrate this point, we were told that to put 100 Eu in a

worker's pocket it costs the employer 170 Eu. In other

words the additional charge to the employer equates to 70%

of net pay.

Secondly, dispensing with the services of an employee

triggers entitlement to a wholly disproportionate level of

compensation, far too complex to set out here, which the

employer must bear.

This goes some way to explaining why there are such

persistently high levels of unemployment in France. Yet the

intractable stance taken by workers' representatives

notably the communist CGT trade union, is simply

entrenching a situation that is wholly antithetical to their

own members' interests.

Particularly hard-hit are small and growing businesses

petrified of taking on much-needed labour because they

simply cannot face the punitive financial impact of an

economic downturn that might require them to lay off staff

in order to remain viable.

The decision of M Hollande and M Valls, his Prime Minister,

to ram a reforming provision through Parliament without a

vote came after months of having to make concessions and

compromises as a means of manoeuvring between the hard-line left in their party and the centrists who recognise the

need for more business-friendly policies. An example of

compromise, forced on the government by intransigent

unions, was to drop a key early provision that would have

limited the size of payouts that labour tribunals may make to

dismissed workers. Employers' representatives now claim

that the Bill has been so watered down that they no longer

support it.

Take a case in point:

The case of SNCF

SNCF is the French nationalised railway company.

Translating euros into £s at 1.25 Eu to the £1, its annual revenue

approximates to £7.2 billion, yet its annual budget (the amount it is

permitted, indeed encouraged, to spend), is £14.4 billion - exactly

double its total revenues!' To compensate (and more) for this yawning

gap, the state subsidy is £9.6 billion.

Not included in the above is the financing of pensions (borne by

taxpayers) at £11..2 billion. Unsurprisingly, financing the resulting debt

mountain costs £1.6 billion, again out of taxes.

So much for the macro. Now the micro :

A train-driver's basic annual salary at commencement of career:

£21,120, rising to £30,720 (or £47,000 as a TGV driver) on retirement.

PLUS : (i) end-of-year bonus ; (i) work bonus ; (ii) journey bonus;

(iv) TGV bonus ; (v) coal bonus (vi) holiday gratuity ; (vi) annual

bonus ; (viì) overtime ; and (vix) away-from-base premium (non-

taxable).

The effect of all this is that a 40-year-old TGV driver receives a NET

annual salary of over £60,000.

NOTE ALSO:

Working week -25 hours

Retirement age-50

Plus Free healthcare

Plus Free rail travel for drivers and their families

And -for SNCF office workers who don't qualify for above bonuses,

SNCF has created a lack-of-bonus' bonus!

Also noteworthy : SNCF represents 1% of all jobs in France, but their

workers account for 20% of the total number of annual strike days !

We can see the same same syndrome of entrenched

attitudes operating at Air France, the national airline, where

the concept of 'acquired rights' has instilled total resistance

to change in working practices. As a result the airline is now

being crippled by a strike of cabin crew, just after the

damaging 'industrial action' by its pilots, whose rewards are

grossly excessive by any standards. It's just a matter of time

before all these puppets reap what their unions have sown,

and Air France collapses into bankruptcy. And it won't help

to say I told you so!"

After 14 years of Mitterand's socialist government he tried,

with Prime Minister Juppe, to introduce reforms to

retirement age, pensions etc, until the government was

forced to climb down after the country was brought to a

standstill - autoroutes blocked, no mail delivered, train

crews on strike and rubbish bins not collected. Neither

Sarkosy nor Chirac were able to dent the intrasigence.

The malaise is pervasive

There are violent demonstrations in France every week

against the socialist government's attempt to give employers

more flexibility over working practices to encourage them to

take on some of the vast number of (particularly young)

unemployed.

In the quarter ended 30 June 2016 the eurozone currency

bloc of 19 nations expanded by a mere 0.3%, half of that of

the previous 3 months. France, of course, was the weak spot

with growth down from 0.7% to zero. The shock shortfall

was blamed - you guessed it - on strikes ! (Spain, by

contrast, continues its rapid recovery with four consecutive

quarters of growth. But then Spain has an unfair advantage

it has not had a functioning government since last October !)

It is not surprising that many French citizens despair - they

believe that France is unreformable, and heading for

collapse and chaos.

Such is the prevailing blindness and deafness of the

lemmings as they hurtle towards the cliff-edge. And although

SNCF and Air France are convenient cases-in-point, the same

situation applies equally in other countries with high

unemployment levels - up to 50% youth unemployment in

Italy, Portugal and Greece. It is not that there is nothing for

them to do - on the contrary, employers would be desperate

to engage affordable labour, but in all these countries

employment-based taxes, insane labour laws and resulting

working practices create civil strife instead.

This is the shape of the 'protectionist' endgame. It destroys

that which it purports to protect.

The amount of turmoil and suffering that necessarily

precedes a change towards sanity is unquantifiable. All we

can say with certainty is that this patently unsustainable

edifice will topple when the instincts of the real sufferers,

the people, tell them unequivocally that enough is enough.

That much, history vouchsafes.