Saturday, March 18, 2006

French protesters don't quite get it

Yesterday, 300 people were arrested in France in a series of violent protests over a new French labor law. This law relaxes France's traditional protectionist labor practices a bit by allowing employers to fire workers under 26 years old who have been working for them for less than two years for no reason.

I personally think this labor law is flawed, but for the opposite reason the French workers are protesting. I think the concept of being able to fire workers at will is great, I just think a law like this should apply to all workers, not just those under 26.

Here in the United States most states have a concept called "employment at will". Under employment at will, a worker may quit his job anytime he wants, and the company can fire him anytime they want. You don't need a good reason - you could fire someone because you don't like the color of the shirt he wore to work that day.

This may sound brutal, but it works. Just because you CAN fire someone doesn't mean you WILL, and if you fire people too often, you'll pay for it: the morale of your team will suffer and you'll find your reputation will prevent you from hiring good staff. But, because the employer knows firing is always an option, they do not need to be as cautious about taking a chance on hiring someone who may not quite fit their mold: an effect that benefits younger workers, minorities, and immigrants. Likewise, employees know that if they start to slack off, they run the risk of termination, and as a result push themselves to keep their performance up. Employment at will, and legal concepts like it make it easier for employers to run their businesses efficiently, and thus makes them more competitive.

As I wrote a few months back, France's protectionist labor laws have not served France well, because the only true beneficiaries of these types of laws are lazy workers - good workers don't benefit, because employers wouldn't want to fire them even if they could. But, these labor laws do hurt disadvantaged groups (minorities, lower skilled workers, immigrants, etc.), and hobble the French economy by discouraging investment. The violent riots that took place in France in November were partly caused by the negative effects of these protectionist laws.