France also takes a permanent vacation from reality

Socialism In France

Another country that is chock-full of politicians and trade unionists that are apparently on a permanent vacation from reality is France. We have just come across an article that explains why there are so many companies with precisely 49 employees in France. Read it and weep (of course this nonsense is not going to be rescinded by Mr. 'Pro Growth' Hollande).

“Here’s a curious fact about the French economy: The country has 2.4 times as many companies with 49 employees as with 50. What difference does one employee make? Plenty, according to the French labor code. Once a company has at least 50 employees inside France, management must create three worker councils, introduce profit sharing, and submit restructuring plans to the councils if the company decides to fire workers for economic reasons.

French businesspeople often skirt these restraints by creating new companies rather than expanding existing ones. “I can’t tell you how many times when I was Minister I’d meet an entrepreneur who would tell me about his companies,” Thierry Breton, chief executive officer of consulting firm Atos and Minister of Finance from 2005 to 2007, said at a Paris conference on April 4. “I’d ask, ‘Why companies?’ He’d say, ‘Oh, I have several so that I can keep [the workforce] under 50.’ We have to review our labor code.”

While polls show job creation and the economic crisis are the top issues for voters in the May 5 second-round vote for president, neither President Nicolas Sarkozy nor Socialist challenger François Hollande are focusing on Breton’s concern. Companies say the biggest obstacle to hiring is the 102-year-old Code du Travail, a 3,200-page rule book that dictates everything from job classifications to the ability to fire workers. Many of these rules kick in after a company’s French payroll creeps beyond 49.

Tired of delays in getting orders filled, Pierrick Haan, CEO of Dupont Medical (not to be confused with chemical company DuPont (DD)), decided last year to return production of some wheelchairs and medical equipment to France. The 150-year-old company, based in Frouard in eastern France, created 20 jobs making custom devices at a French plant—and will stop there. Faced with France’s stifling labor code, Haan probably will send any additional production of standard equipment to what he calls “Near France”—Tunisia, Bulgaria, or Romania. “The cost of labor isn’t the main problem, it’s the rigidities,” Haan says. “If you make a mistake in your hiring plans, you can’t correct it.”

Good grief! It is a miracle unemployment in France is only at 10%. You have to install three workers councils' if you employ more than 50 people? And hew to a 3,200 page rule book that dictates everything?

And now Hollande wants to raise both taxes and the minimum wage on top of this?  One should probably short France with both hands. Pity there's no longer a French Franc, that would be the most direct way of doing it.

Just look at what trade union representatives have to say about this labor code that is guaranteed to choke off all entrepreneurial initiative:

“Worker groups say the code itself isn’t the issue. “If the code is complicated, it’s because our society is complicated,” says Bernard Vivier, director of the Higher Institute of Labor in Paris, which studies labor relations for unions and companies. “Cars are much more complicated today than they were 40 years ago. Why shouldn’t the labor code be?”

This sounds like the kind of argument a five year old child might make. How do you even debate the issue with someone like that?