[EDITORIALS]The French connection

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[EDITORIALS]The French connection

Student protests in France over a new law that would allow companies to fire employees under age 26 at will during their first two years on the job are now escalating to large, violent demonstrations that involve 1.5 million people. An effort by the government to overcome a dire economic situation, in which the country is posting an annual growth rate of two percent while the unemployment rate for young people is hovering at 20 percent, is in danger of failure. Paris wants to make the labor market more flexible to reduce unemployment. Outwardly, the protests look like an attempt by the young generation to secure their bread and butter. But after a closer look, they show the downside of a social welfare system that was too generous. Unlike the United States, France considers the right to work as a basic right of its people; finding jobs for the people has been considered the government’s duty. If one didn’t like a job he could refuse it, and jobless people were eligible for a fat unemployment allowance. In a good economy, such a system can be sustained without any large problems. When international competition gets fierce and the economy is in recession, however, an inflexible labor market and overtly protective welfare system are a huge burden. The French government tried to introduce the new employment law to break out of that trap.
But it’s hard to reduce welfare payments, and such a system should not be seen by politicians as a way to show goodwill to the people. Who would want to give up benefits that are vested rights? If the conflict escalates into one between generations, that is even worse. It is hard to use public power to force young people to accept such a burden when earlier generations benefitted from government largesse.
The demonstrations in France are not something far away from us. The essence of a bill on irregular workers that awaits passage by the National Assembly in April and the National Pension Law that the government is seeking to change are essentially the same as the system France is trying to change.
It’s not easy to get the agreement of the people in light of opposition from labor unions at conglomerates and from the younger generation. Nevertheless, pork-barrel policies like emergency welfare subsidies for the poor are being handed out generously. The Assembly’s budget office says that 138 trillion won ($142 billion) would be needed to implement the 3,000 bills introduced during this Assembly. The only interest there seems to be in spending money, not in making it.
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