Monday, October 30, 2006

Michigan vs. France

Michigan's September unemployment rate of 7.1% is considered high for the U.S., second highest in the country next to Mississippi (7.2%). But if Michigan was a country in Europe, it would be considered much better than average compared to the 7.9% average unemployment rate for OECD Europe countries.

Germany's unemployment rate is 8.5% for August, France is 8.8%, Finland 7.8%, and Belgium 8.6%.

From today's
Investor's Business Daily, an editorial about the persistent unemployment problems in France, despite the mandatory maximum 35-hour work week that was supposed to create jobs:

No longer able to withstand the rigors of a normal schedule, the French had to cut back to a 35-hour workweek. Six years later, and the rotten fruit of socialism is being harvested.

With fewer hours worked, the state predictably has been collecting fewer taxes. The shorter workweek, Finance Minister Thierry Breton reported this week, has added roughly $126 billion to the national debt. For a country obsessed with the safety net, this was deflating news.

But the lost productivity and the drag on economic growth are even worse. All told, the 35-hour week has cost France hundreds of billions of dollars in lost output.

The 35-hour workweek, introduced by I-saw-Karl-Marx-in-my-dreams Socialist Prime Minister Lionel Jospin, was peddled as a solution for France's high unemployment rate. With employees working fewer hours — down from 39 a week before overtime kicked in — businesses would be forced to hire more people.

Has it worked? No. France's jobless rate continues to stagnate in the 9% area — just modestly better than the 5 1/2-year high of 10.2% between March and May of last year, but not much. Nine percent is about where it was when President Jacques Chirac took office more than 10 years ago.

It can take up to 100 days of bureaucratic dithering to get rid of an employee in a big company. As a result, businesses are shy about hiring because they fear they can't fire a worker for not doing his or her job.

French business leaders want the 35-hour workweek abolished. That's a good idea. Unfortunately, fierce resistance from the socialists might be too much to overcome.


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