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Actual facts about the French labor market

by Jerome a Paris Tue Mar 28th, 2006 at 08:57:14 AM EST

The following was written as a summary of the facts about the French labor market that we can oppose to the narrative on the French strikes.

I have crossposted this over at Dailykos and count on your recommendations to make it visible over there. I will keep this thread in the debate box and I ask all of you to post all new facts that we can gather on this topic there, with sources.


As France goes through another day of protests, the coverage in the US press is so appallingly bad that I am not surprised by some of the comments in my previous diaries, by people that are shocked by the seemingly irrational behavior of the French.

Let me say it as directly as I can: most of the coverage I have seen is either wilfully ignorant or purposedly lying, and they repeat a number of falsehoods about the French labor market that are, quite simply, shocking.

Let me try to correct the record.

Again, this should preoccupy you guys, because the underlying message is: progressive economic policies are failures, and only further "reforms" (read pay workers less and give them fewer rights, bust unions and cut taxes to corporates) will work. If even you guys buy that, what hope is there to change things?

Today's culprits:

The LA Times (Rift Emerges Among Young Haves and Have-Nots in France)
The NYT (Four Ways to fire a Frenchman)
The Guardian (De Villepin stands firm on law as France heads out on strike)

Here are some of the lies they are spewing:

Riots are ongoing

It would seem, reading the US press, that Paris is burning (again). It wasn't last October, and it isn't now. Most demonstrations are peaceful, family affairs - people exercising their democratic right to free speech and demonstration.

These rallies have been marred, on the sidelines, by very small groups of criminals that take advantage of the crowds to steal form people and to attack the police form the safety of the crowds. These are still isolated incidents, despite all the images you may see - and they have very little to do with the protests themselves.

The protests are not violent, and they can in no way be described as riots. Go and read Alex at Toulouse's diary over at eurotrib: he was in one of the protests himself and took pictures. See for yourselves what most demonstrations look like.

The youth unemployment rate is extravagantly high

I've already written about this, but would like to be even more explicit about this. The unemployment rate for the under 24s in France is indeed 23%. But you have to remember that the unemployment rate is the ratio of unemployed to active population (i.e. those working or seeking work). Counted as a ratio to the overall youth population, unemployment is only 8%, just like in the UK or the US.

The right column id the proportion of youth that are unemployed (as a fraction of the whole age class). The left column is the employment rate: the proportion of youth that work. It is much lower in France, but this is explained to a large extent by the fact that a lot of the youth are students, and they do not need to work to pay for their studies.

See this graph: that's the portion of youth that have to work while being students.

Students are not "active" in France, and thus the active population is higher, and thus the unemployment rate appears correspondingly higher even though the number of youth unemployed is no higher than, say, in the UK.

That makes the whole "France is in crisis" much less convincing when you start comparing 8.1% to 7.6%, right?


Note, US numbers can be found here:

Employment rate: 66.2% (as comapred to France's 30.4%)
Unemployment rate: 11.3% (as compared to France's 23%)
Unemployed: 7.6% of the total number of under-25s (as compared to France's 8.1%)

It's impossible to fire people in France

The biggest lie that's been spouted is that it's impossible to fire people in France. That's simply untrue.

The NYT article is shamefully wrong on substance, and I encourage you to read the thorough debunking done by afew here

Here are a few more facts.

From Jean-François Couvrat, a labor market expert


(my translation)
Eurostat indicates that the main indicator to assess the flexibility of a labor market and the mobility of workers is the proportion of workers who have been in their job for less than 3 months. That proportion is 6.7% in France, higher than in the UK and than the 4.9% EU average...

From Blanchard (a well known MIT economist)(pdf):


The labor market is characterized by large flows--high rates of separations from firms, and high rates of hires by firms. In France for example, 1.5% of all jobs are destroyed each month and roughly as many are created-- interestingly, this is about the same percentage as in the United States. As there are many reasons other than job destruction why a worker may separate from a firm, the flows of workers are typically much higher. In France, they are of the order of 4% per month (Pierre Cahuc and André Zylberberg 2004).

So France churns jobs just as fast as the USA. How's that for "flexible"?

France does not create jobs

This is simply untrue, again. From the above Couvrat article:


French companies never stop creating jobs. In 1993, the worst recession year in a long time, they hired 3.6 million people; the number was 4.8 million in 2003, a year with weak growth, and 5.4 million in 2000, a boom year.

More striking, according to the OECD, France has actually created more jobs than the supposedly flexible UK and UK economies! (click for bigger - "Royaume-Uni" = UK, "Etats-Unis" = USA))

or this: (Source, pdf)

The full line is the total number of jobs; the other is the total number of hours worked. They both grew at a record pace precisely during the 3 years when the 35-hour week law was put in place (it is widely credited (pdf, in French, with abstract in English) with having created 300-500 thousand jobs) and the socialist government put in place a jobs programme for the youth - both measures have been since cancelled by the right wing government which, strangely enough, came to power in 2002.

So France actually created more jobs than the USA in the private sector, and more jobs both overall and in the private sector than the UK - precisely at the time when supposedly irrational measures like the 35-hour week were in force.

So, please, be extremely careful when you read article about the "rigidity" of the labor market, the "jobs for life", and the unwillingness of French companies to create jobs. Most of it is, quite simply, untrue.

This is not to say that everything is perfect, far from it, but the problem is much smaller than everybody (including in France!) is led to believe.

Students are "privileged activists"

One of the nastiest narratives in that context is that presenting students as "privileged" people trying to keep their "lifetime employment" away from the banlieue immigrants (see the LAT article for that line). Nothing could be further form the truth. University students are low or middle class (the privileged go to the separate - and really elite - Grande Ecole system), and they are the main victims of today's existing labor flexibility.

The real problem in France is that you do have an insider/outsider system. Students (like older people thrown out of companies when they lay off) are outside, and the new law keeps them even more on the outside. They already have the temp jobs, the short term jobs, they are already the first ones to be fired when companies get rid of workers. They already provide all the flexibility the system needs (and has, as pointed out above).

One solution would be to make everybody bear the flexibility, i.e. make it as easy to hire and fire middle aged males as it is for youth. That's where everybody is pushing, and IT DOES NOT WORK in practise. The other solution is to bring back the youth into the fold, by giving them more stable prospects, like the Socialist Prime Minister Jospin did with the youth jobs programme in 1997 (5-year contracts to work in the social sector, i.e. help in schools, associations, NGOs, libraries, etc..) - it demonstrably worked.

The new jobs contract will help immigrants

The flip side of the argument about the "privileged" students is that they are keeping jobs away from the poor oppressed immigrants. No. They are in the same situation, and the banlieue youth are even more against the new contract, because it will make it even easier to discriminate against them. No restrictions to firing in the first two years means including for reasons of race, opinion, gender, etc.... Be fully compliant or you can be fired at any time, and get fired anyway after 2 years because who will give you a fully protected status then when they can fire you and get a new compliant kid instead. Lots of jobs don't require such skills that you cannot be replaced easily by an equally well trained kid.

So please, please do not believe all these articles that say that French students are fighting a pointless battle against reality and globalisation, that France is hopelessly rigid (and violent) and its workers shamefully protected and that this reform is "necessary and useful". It is neither.

This is an ideological fight. It's a fight of the progressives against the relentless march of the logic of focusing only on short term corporate profits.

Display:
Anyone know of a source for stats on discouraged workers in France and other EU countries? I can't find one via Google.
by Colman (colman at eurotrib.com) on Tue Mar 28th, 2006 at 09:19:56 AM EST
In Tuesday's NY Times resident idiot John Tierney has an op-ed titled "Who Moved my Fromage?".

Perhaps, Jerome, you might like to send him a copy of your essay. A choice insight from this pundit:

"Close to a quarter of its young people are unemployed, but they're too busy burning cars to look for jobs."

The Times has a new email system so it's possible you can now reach him directly...

Policies not Politics
---- Daily Landscape

by rdf (robert.feinman@gmail.com) on Tue Mar 28th, 2006 at 09:25:03 AM EST
...but also in response to the FT, as was rallied for by Agnes. I think you slamdunk most if not of all the necessary points, although I would add the "protectionist" red tape graph, which afew posted in a diary a couple of weeks ago.
by Nomad on Tue Mar 28th, 2006 at 09:36:00 AM EST
[ Parent ]
Do you mean the one about Foreign Direct Investment?
by afew (afew(a in a circle)eurotrib_dot_com) on Tue Mar 28th, 2006 at 11:47:12 AM EST
[ Parent ]
That's the one. Or had that nothing to do with protectionist measures...? I'm too easily confused. But I looked it up. Yes, that's the one.

But after tonight and attending a lovely Mozart concert which is very soothing for the mind, I've second thoughts whether it'd be useful. That one was more in conjuction with the rows over the energy companies, and not specifically adoptable to the issue at hand (or at least not that I can directly see). It shouldn't be used if it distracts from the core issue.

It' just... such a telling graph. Me likes it.

by Nomad on Tue Mar 28th, 2006 at 06:35:38 PM EST
[ Parent ]
Mozart works wonders. Yes, though that graph is telling, I'm not sure it's entirely on topic here. Except to show that protectionism against foreign investment in the economy doesn't seem to be a likely runner in the major-causes-of-French-unemployment race.

However, the OECD report I wrote about claims protectionism causes unemployment, so here's a link to my diary for anyone who is interested.

by afew (afew(a in a circle)eurotrib_dot_com) on Wed Mar 29th, 2006 at 02:30:33 AM EST
[ Parent ]
Can you email me the article if you have it? It's behind the sub.wall.

In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Tue Mar 28th, 2006 at 09:49:45 AM EST
[ Parent ]
that's the portion of youth that have to work while being students.
Excuse me, Jerome...

Let me give you a little multiple choice test:

That's the proportion of youth that

  • have to
  • choose to
  • are able to
  • do
work while being students.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Tue Mar 28th, 2006 at 09:28:13 AM EST
So should I edit to "that work"?

In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Tue Mar 28th, 2006 at 09:49:17 AM EST
[ Parent ]
Unless you are prepared to argue persuasively for any of the other options.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Tue Mar 28th, 2006 at 09:55:20 AM EST
[ Parent ]
a lot of the youth are students, and they do not need to work to pay for their studies.
This is a topic for another diary: how much does education cost, and who pays for it, in different countries.

We lambasted the UK and the Netherlands for lowering their unemployment statistics by shunting people off into "disability", so why can't we argue that shunting people into "study" is not artificielly lowering youth unemployment?

I am not saying that is the case, just that this is an issue that needs to be explored. And I don't believe over 60% of Danish students need to work to pay for their studies. There are cultural and social factors at play here.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman

by Migeru (migeru at eurotrib dot com) on Tue Mar 28th, 2006 at 09:59:24 AM EST
[ Parent ]
Actually, Jerome, what does Part des combinations etude-emploi (stages, cursus en alternance...) actually mean, exactly? The mention of stages in particular makes me suspect we're misinterpreting the data.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Tue Mar 28th, 2006 at 10:15:31 AM EST
[ Parent ]
I seem to remember commenting on this when this graph first came out here. This is about people doing study and work in a vocational training context where the work is part of the training. These might be internships tied to a course of study; or "alternance", referring to a legally-defined system of work interrupted by periods of study, leading to a professional qualification.

In other words, if you're saying this graph isn't about students who also have part-time jobs to get by, you're right.

As to whether these students are included in the employment figures, I don't know. I suspect some may be listed as students, others as having a job, depending on the type of course they're doing.

by afew (afew(a in a circle)eurotrib_dot_com) on Tue Mar 28th, 2006 at 11:57:16 AM EST
[ Parent ]
Jerome if we are talking actual facts about the French labor market, why is this listed as a debate? Do any of us want to debate facts?
by observer393 on Tue Mar 28th, 2006 at 10:03:53 AM EST
I think so it'll hang around a while. We could  have called it the "debates and other long-running things box" but that didn't fit...
by Colman (colman at eurotrib.com) on Tue Mar 28th, 2006 at 10:07:20 AM EST
[ Parent ]
You could call it a "community hotlist" or "admin hotlist". It serves the same purpose.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Tue Mar 28th, 2006 at 10:13:35 AM EST
[ Parent ]
I think we'll change it if and only if it becomes a real and ongoing irritation.
by Colman (colman at eurotrib.com) on Tue Mar 28th, 2006 at 10:14:36 AM EST
[ Parent ]
The idea is to use the thread to accumulate additional facts and keep it in a visible place.

Also, we can debate labor market reform on a more informed basis. A 23% unemployment rate, even if it's less horrible than presented, is still pretty bad and it would be a good thing to do something about it...

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Tue Mar 28th, 2006 at 10:10:14 AM EST
[ Parent ]
by observer393 on Wed Mar 29th, 2006 at 09:34:54 AM EST
[ Parent ]
Is it possible to add a section on the unemployment rate of North African immigrant youth?
by asdf on Tue Mar 28th, 2006 at 09:21:45 PM EST
Thanks for putting this up Jerome.  I don't care if we call it a debate or some other name, but it's very helpful.

I have a number of comments, but let me begin by commenting on your perspective, in particular the perspective of the way Americans are reacting to this.

Again, this should preoccupy you guys, because the underlying message is: progressive economic policies are failures, and only further "reforms" (read pay workers less and give them fewer rights, bust unions and cut taxes to corporates) will work.
I'm spending an inordinately long amount of time thinking as I write this, trying to get it right, in the sense of sharing my thoughts.  I have a sense that you are thinking that some segment of America wants France to be progressive or conservative, views France's success or failure as a guide to the US.  I sense that you see some cabal in America, in the newspapers or more broadly, that wants to spin your news negatively, and thus change France.  I don't think that is accurate.

First, I would argue that a very large minority of America promote progressive economic policies, are concerned with the ludicrously increasing ratio of the high earners/working man, and want corporations and the "rich" taxed at higher levels.  The support for unions IMHO would not be as high.  Furthermore, as regarding the print popular press, and major TV news, there is even broader support (definitely a majority) for these positons.  In other words, there is great media support, and very significant popular support, for a progressive agenda.

Second, some percentage of Americans, let's say 15%, are really quite interested in France--love the beauty, culture, etc, etc (this would include me).  Another percentage of Americans have no time for France at all, say 20--25%.  It's not a hatred, but close.  They feel De Gualle and the French in general, "dis-respected" the American contribution in WWII.  They feel the lack of support over Iraq was a further insult.  They feel insulted when they visit France, and expect the French to speak English to them, and that if they don't, they are insulted.  Some don't expect the French to speak English, but the French really do treat them rudely.  This is the Fox's Bill O'Reilly group.  But for the remaining, let's say 60%, they are involved in other things, and France is just not on their radar screen.

As to

Let me say it as directly as I can: most of the coverage I have seen is either wilfully ignorant or purposedly lying, and they repeat a number of falsehoods about the French labor market that are, quite simply, shocking.
This is a little dated, but the American teenager of 15 years ago would say, "well, duh".  With an emphasis on ignorant, not necessarily willful, in this case.  If you think the French are the only group getting ignorant, and willfully ignorant, coverage,,,it's just not true.

Americans are very confused about the 35 hour work week, and the 9% unemployment rate.  But it comes into their life as a message about once a month.  So it just doesn't hit the radar screen.

So my message here is, there is not a cabal trying to put the French riots into a negative framework, with an intention of changing either French or American policy.

Well, i've thought about not posting this, because I think it would be a discussion more appropriate to a bottle of wine, or two, or a few pints of bitter.  This is a subject that would have benefited from dialogue, rather than a diary.  But what the heck, it's written, so here it is.

by wchurchill on Wed Mar 29th, 2006 at 12:26:31 AM EST
Thanks for the thoughtful reply. I have little to disagree with what you posted, but here are a few further explanations on what I meant:

  • the debate is not about France per se, it's about enconomic policies favoring the corporate classes vs the labor, and my point was that, while it may not be obvious, the fight is very similar in the US and in France, and thus the French strikes are relevant to the US left;

  • it is about France to the extent that France is the country that expresses most forcefully a different view on economic policy, and there is a "shoot the messenger" aspect in the fight, i.e. make France look back and policy prescriptions coming from France can be safely demonised;

  • the "ignorance" comment does not preclude, of course, ignorance about other topics. But on this one, I was worried about the opinions I read from the US left about the "privileged" "pampered" French students.


In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Wed Mar 29th, 2006 at 04:46:16 AM EST
[ Parent ]
Part of this thread address the issue of is this really a debate?; shouldn't we have a reservoir of various information somewhere on the site?  That left an opening for me to comment on the following, which has been on my mind.  I for one would like to see a place on the site where we can save and present good information.  I think the Political Compass project orchestrated by Migeru, and I believe Colman, was incredibly successful and very helpful.  I have it bookmarked and refer to it often.  I find it gives me some insight into a debate to see where some of the participants are coming from in a broad sense.

But I would like to see an ongoing update to the chart, that is if Migeru or someone wanted to take on that extra work.  Not everyone participated the first time around, and some may want to now; and of course we get new members all the time.  We would need information on the purpose of the Compass, how to take the test, and then a mechanism for updating--and probably a lot more, those are just a few thoughts.

Have others found this helpful like I have?

by wchurchill on Wed Mar 29th, 2006 at 12:11:57 PM EST
Robert Samuelson focuses in a recent article on:
The dilemma of advanced democracies, including the United States, is that they've made more promises than they can keep. Their political commitments outstrip the economy's capacity to deliver.
This has off and on been a significant issue in the US, with both Clinton and Bush making recommendations for Social Security, but neither touching the real bomb shell of the cost of healthcare for the retiring baby boomers.  But Congress has not wanted to address the issue, preferring to "kick the can down the road", leaving it for others to solve.  There are some rather scary long range budget projections which show the need to cut back benefits or raise taxes, but not for more than a decade.

Samelson argues that France has similar issues with their demographics, and other factors make the problem very challenging for France.  I think I recall someone, perhaps Jerome, saying this would be a pretty easy issue to fix with some balance of tax increases, benefit cuts, and later retirement.  Just wondering if their are long range budgets in France that lay out the extent of the problem, and how it could be addressed?

I found the Samuelson article to be good, though it has some of the same misleading presentation on youth unemployment statistics that we have criticised elsewhere.

by wchurchill on Thu Mar 30th, 2006 at 02:19:34 AM EST
There is a, as far as i can tell, interesting work paper from non other then the IMF regarding fiscal policy and the age issue.

Aging: Some Pleasant Fiscal Arithmetic

I don't have the mathematical stamina or the background to judge its merits but i hope it is useful to this discussion, in the hands of someone more able.

Overall it proposes things may not be as tragic as some make them, hence the "Pleasant".

by Torres on Fri Apr 7th, 2006 at 07:53:01 AM EST
[ Parent ]
interesting work paper from non other then the IMF
On the second page it says "this working paper should not be reprted as representing the views of the IMF".

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Fri Apr 7th, 2006 at 08:02:48 AM EST
[ Parent ]
Yes, i saw that. Still, it's on their website...
Doesn't say anything of the validity of the argument, in one sense or the other, does it?
by Torres on Fri Apr 7th, 2006 at 09:31:57 AM EST
[ Parent ]
OK, let's add some actual debate to the fact-gathering!

It's great that you present alternative interpretations Jerome.  But before you accuse media outlets of ignorance and lies you should be humble to the fact that you're playing the statistics as much as they are.

For instance you say that the youth unemployment is only 8%, because you claim that students should be factored in.  However, the students are studying and do not compete in the market of full-time jobs.  Of those youth that DO compete for full-time jobs, 23% can't get one!  That's one in four!  (And if I remember correctly, this figure is around 50% for the banlieue immigrants.)

And for all your talk of job creation in France's supposedly flexible job market: France's overall unemployment has barely budged from 10-12% in the last two decades.

Why not?  A large part of the reason is that employers are wary of hiring when it is difficult (yes, not impossible, but difficult) to fire.  So of course employers resort to temp hires and such.

The only way to address this in a fair and effective fashion is not the CPE law that was limited to people under 26.  Instead, it is to make the whole job market flexible for everyone.  Let 90% lose a little psychological security (which is what it's about, the overall number of jobs is going to increase, not decrease), and let more of the remaining 10% actually get a job!

------
Ideals are the ultimate motivators. But also the greatest causes of destruction.

A tip: Don't get too high on your ideals.

by cge on Tue Apr 18th, 2006 at 01:21:14 PM EST
Has anyone noticed this academic paper on French youth employment?

Howell (PDF)

Perhaps someone with more knowledge of the issues might like to comment on it.

Policies not Politics
---- Daily Landscape

by rdf (robert.feinman@gmail.com) on Tue Apr 25th, 2006 at 04:25:42 PM EST
Good catch. That's lovely. They must read ET.
by Colman (colman at eurotrib.com) on Tue Apr 25th, 2006 at 04:31:22 PM EST
[ Parent ]
Excellent, rdf. Everyone should read this.
by afew (afew(a in a circle)eurotrib_dot_com) on Wed Apr 26th, 2006 at 11:56:18 AM EST
[ Parent ]
It is widely accepted, particularly among economists, that employment protection legislation is one of the main reasons for high unemployment
...
In fact, the available economic evidence provides little support for the view that scaling back EPL will result in declining unemployment
<head explodes>

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Wed Apr 26th, 2006 at 12:03:59 PM EST
[ Parent ]
I took that to mean they were saying that what is widely accepted is not necessarily borne out by the facts... No?
by afew (afew(a in a circle)eurotrib_dot_com) on Wed Apr 26th, 2006 at 12:29:22 PM EST
[ Parent ]
So what does that say about economists?

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Wed Apr 26th, 2006 at 12:32:23 PM EST
[ Parent ]
Allow me to reiterate the difference between economic scientists and economic propagandists. There are for more of the latter than the former and they get more coverage.
by Colman (colman at eurotrib.com) on Wed Apr 26th, 2006 at 12:40:14 PM EST
[ Parent ]
The above was a statement by economic scientists about economic scientists, wasn't it?

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Wed Apr 26th, 2006 at 12:53:38 PM EST
[ Parent ]
Perhaps it was more a statement about conventional wisdom.
by afew (afew(a in a circle)eurotrib_dot_com) on Wed Apr 26th, 2006 at 12:59:29 PM EST
[ Parent ]
They say that that particular bit of conventional wisdom is particularly widespread among economist, who should be the ones more familiar with the facts, such as
According to the OECD's 1999 evaluation of EPL, "the basic finding appears robust: overall unemployment is not significantly related to EPL strictness". The OECD's conclusion was reaffirmed in 2006 in what is perhaps the most careful test of its kind to date".
Now, does the OECD also advocate relaxing EPL as a policy in order to improve unemployment, and does the OECD qualify as an economic science or an economic propaganda outlet?

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Wed Apr 26th, 2006 at 01:05:45 PM EST
[ Parent ]
The OECD leans towards the propaganda outside of their statistics dept. And even then ... the discussion of the weighing of EPL strictness is interesting and explains some of my confusion when I was reading those definitions.
by Colman (colman at eurotrib.com) on Wed Apr 26th, 2006 at 01:13:43 PM EST
[ Parent ]
The OECD is a big set-up producing different kinds of work that do not always fall conveniently into what could be called a "line". In general, it pleads for "business-friendly" practices, and one of its productions to that end is an EPL index ranking countries according to their EPL-ness (ranking that the authors of this piece criticize).

Is the OECD science or propaganda? You tell me.

by afew (afew(a in a circle)eurotrib_dot_com) on Wed Apr 26th, 2006 at 01:21:36 PM EST
[ Parent ]
From my conversations with Economics graduate students a couple of years ago it was also hard to figure out whether academic economics was science or propaganda.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Wed Apr 26th, 2006 at 01:31:27 PM EST
[ Parent ]
It was a statement by economic scientists.
by Colman (colman at eurotrib.com) on Wed Apr 26th, 2006 at 01:05:02 PM EST
[ Parent ]
Anyone want to diary it? Leaves me free to do something else...
by Colman (colman at eurotrib.com) on Wed Apr 26th, 2006 at 12:06:44 PM EST
[ Parent ]
AgnesaParis's diary led me to follow some links and some Googling to what seem like good articles on the French issues around aging and their retirement/pension system.  An issue which as I've mentioned before, it seems almost all Western countries have issues with--certainly the US does.  I'll also post this on the debate section posted by Jerome, "Actual facts about the French labor market, as it may serve as a useful resource point in that debate.  All of these articles are associated directly with OECD.

The French Pension Pickle

Martine Durand: Like most other OECD countries, France is facing rapid population ageing because of low fertility and longer life expectancy. This means the dependency ratio of older people - those aged 65 and over as a proportion of those aged 20-64 - will rise from 25% at present to 50% by 2050. In other words, there will be more older people, but fewer people of working age to support them.

These demographic trends are putting tremendous pressure on the French pension system, which is based on what we call a Pay-As-You-Go (PAYG) distributive principle; people who are currently working pay the pensions of those in retirement. Everybody agrees that reform is necessary; if nothing is done soon, public deficits could rise by some 5% of GDP over the next 30 years. And public debt could more than double. So, without reform now, our children and grandchildren will pay the price.

France: Jobs and older workers
France's labour market is a two-sided coin. On one side, it boasts one of the highest productivity rates per employed worker in the OECD, yet, on the other, there are whole sections of the adult population not in work. Apart from unemployment, which is stubbornly high, the employment of older people is now absorbing considerable public attention. Mobilising these people into the labour market would not only help strengthen French economic performance further, but reduce pressure on pensions and public finances.

The above chart demonstrates some of the challenges of aging populations, early retirement and longer life spans.

The OECD feels that '03 pension reforms are not proving to be as successful as intended

11/03/2005 - A new OECD report, Ageing and Employment Policies in France, notes that the pension system reforms made two years ago have had little effect. Older workers are still quitting the workforce early. Less than half of them move directly from a job to a pension. The rest move to shadowy areas of pre-retirement such as public or private early retirement schemes and unemployment insurance, from which they rarely return to jobs.
I could not find links to a full version of the report--but it looks like it's coming in June.
by wchurchill on Wed Apr 26th, 2006 at 04:09:29 PM EST
I'm adding this link provided by brunoken, French government eyes 'le baby boom'

FERTILITY RATE
In Europe 2.1 children per woman is considered to be the population replacement level. These are national averages
Ireland: 1.99
France: 1.90
Norway: 1.81
Sweden 1.75
UK: 1.74
Netherlands: 1.73
Germany: 1.37
Italy: 1.33
Spain: 1.32
Greece: 1.29
Source: Eurostat - 2004 figures

At-a-glance: National policies

With all this, it is maybe not surprising that France is managing to buck the trend of European depopulation. With a fertility rate of 1.916, it is second only to Ireland in the birth stakes and, unlike many countries, its population is growing strongly.

According to recent government figures, France's population should reach 75 million (from 62 million today) by the middle of the century, in the process overtaking Germany - whose numbers the UN says will fall from 82 million to 70.8 million in 2050......
What is particularly gratifying to French planners is that the bulk of the current population increase - put at 0.68% a year - is caused by home-grown births and only a quarter to immigration.

This is an important piece of information, because countries such as Japan and Germany will have the additional problem of declining populations, and in Japan's case complicated with low immigration rates (I believe).  I don't think this changes the need for policy adjustments, as presumably these are the replacement and immigration numbers that are used in the models--note "presuming", we should check that.
by wchurchill on Thu Apr 27th, 2006 at 01:59:19 PM EST
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