Sunday, April 02, 2006

Brussels Journal attacks French demonstrators

Under the heading "The collapse of France. Grab what you can get", the ultra-liberalistic Brussels Journal writes about the protest demonstrations in France:

France has 60 million inhabitants. Yesterday between one million (police figure) and three million (trade union figure) of them took to the streets in protest marches against the government’s youth employment bill (CPE). The bill, which was approved by a large parliamentary majority, allows small companies to fire workers under 26 without cause during the first two years on the job while paying them only 8% of their salary in damages. The bill applies only to young people in their first job. Nevertheless, the French trade unions joined the student protests out of principle. In France a job is virtually owned by the employee and cannot be taken from him unless the employer pays heavy damages.

The Brussels Journal does not seem to understand what it is the young people and the unions are demonstrating against. They demonstrate against the assault by a conservative government on the worst insecurities employees suffer in the labour market. It is actually not so that employers cannot dismiss workers in France. That is possible. They just have to give a reason, and perhaps some compensation. It is only a natural part of the employers' social responsibility. Without such social responsibility it is a one-way street capitalist market economy for employers.

French economists have studied the so-called "Danish model", and this "flexicurity model" is probably part of the inspiration behind the labour market legislation in France. If employers can hire-and-fire with no restraints, the globalised market economy can function more freely, and it'll do its wonderful work of job creation, it is believed.

One reason for the vehement protests is the fact that the French have taken one side of the Danish model, the hire-and-fire, but they have not emulated the social security side. Then it is no wonder there have been protests. - Too much "free lunch" for employers, and too much punishment of workers. Another caveat is that what works for a small economy is not necessarily to be emulated by a large economy. The small Danish economy has been able to find niches in the market left by the European and global giants, and it has gained stronghold by exploiting a growing energy economy and a favorable position as gateway to the Baltic and Scandinavia, which have opened up after the demise of the Berlin wall and access to East European markets. The Danish economy is a special case in that it has developed strongholds in shipping sectors (Maersk Line) connected to the increasing oil and gas production from the North Sea oil and gas fields. And it has strongholds in the medico sector. It is by these factors as much as it is by "flexicurity" that the successes of the Danish economy in the beginning of the 21st century is to be understood.

Furthermore, it is questionable how weak the French and German economies actually are. These are the two economies that are often referred to as the two big "eurosclerosis cases". Germany has high unemployment, but at the same time it is the biggest exporter in the world. The German export offensive is partly an important element in the success of the Danish model. Danish companies are suppliers to large German businesses.

The lull in the French and German economies is largely attributable to the Euro-zone's Growth and stability pact and the convergence critieria connected to it. It is difficult to stimulate the economy when these criteria apply. The European Central Bank (ECB) is modelled on the German central bank. Its monetary policy is based very one-sidedly on monitoring the monetary aggregates for the sole purpose of controlling inflation and keeping inflation down under 2 per cent. In comparison the American federal Reserve can take the overall economy into consideration. At the supranational level a financial policy of stimulation is practically absent, as it is difficult for the 12 euro-economies' finance ministers to coordinate efficient economic policies. The combination of the most conservative central bank in the world and the least interventionist economic policy leaves perhaps too much to market forces. No matter how "free" the labour market is it will not be capapble of redessing this.

The stagnation of the German and French economies may very well be a temporary phenomenon. The main reason for the temporary economic lull is not employee protection. This is conservative-liberalist propaganda that serves the interests of capital.

3 Comments:

Blogger Sophia said...

Cosmic Duck,

I agree with you. But is it really tue that the french borrowed the law from the Danish but striped it from the soical protection aspect. And how do you rate social protection in Denmark in regard to other northern european countries such as Sweden and Finland ?

7:30 PM  
Blogger Dr Victorino de la Vega said...

Who reads "The Brussels Journal" anyway??
;)

3:32 PM  
Blogger Cosmic Duck said...

Dr. Vega.

Actually, it is my impression that quite a lot of people read it. Then, of course, you can ask if it's worth reading? That is quite another matter.

11:05 AM  

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