Wednesday, November 09, 2005

Must Read

Here's a link to the original article, but I'm not chancing that you don't have a WSJ subscription. You need to read this great article and wonder why Ted Kennedy and Nancy Pelosi are trying to put us in the position that France is in. Higher minimum wages and labor laws that restrict new jobs are horrible in the long run. Can liberals read? Airlines have to go into *bankruptcy* to remove the restrictions for companies to negotiate with labor unions.

Equality is equal opportunity to get a job and perform, equal opportunity to get the skills that put you ahead; equality *does not* mean everyone makes the same wage, everyone is tied by the same chains. The sooner Americans realize this, the sooner liberals are prevented from being positions where they invariably cause damage.


Behind the riots in France lies a surefire recipe for discontent: a rigid job market and widespread discrimination against young Muslim men.

The country's unwieldy labor-market policies, which protect job-holders but have created stubbornly high unemployment of around 10% for France's overall labor force, particularly hurt youths -- especially those of African descent.

When few jobs are being created, it makes those with weaker credentials more prone to being shut out entirely, says Raymond Torres, head of employment policy at the Organization for Economic Cooperation and Development. Discrimination adds to the barriers. "These problems would be less severe if the labor market were more dynamic," he says.

Rioting across France is entering its 14th day. Although the number of car burnings and arrests across the country on Monday night was down slightly from Sunday, some areas of France saw worsening unrest. More than 200 towns saw rioting, 12 schools were destroyed and citizen militias continued to form. Scattered reports of arson also were mounting in neighboring Belgium.

France has called up 1,500 police reservists, bringing to 9,500 the number of police deployed to quell the riots, and invoked a 1955 state-of-emergency law enabling local law-enforcement chiefs to impose curfews on riot-hit areas. Curfew violators, if caught, can face as long as two months in jail.

The riots have centered in the banlieues, the poor, immigrant suburbs of French cities where many struggle to find work. Leaders in France and elsewhere in Continental Europe have often argued that their "social model," based on tempering capitalism with worker protections, avoids the damaging social divisions of free-market capitalism as practiced in the U.S. or Britain.

But the past two weeks' riots in France have brought new attention to the fact that the Continental model can also create a persistent underclass. That is because labor rules aimed at protecting workers against low wages and layoffs also tend to deter companies from hiring -- especially workers with lower education or from minority backgrounds.

"The republic is at a moment of truth," said Prime Minister Dominique de Villepin in a special National Assembly session to address the unrest. "What is being questioned is the effectiveness of our integration model."

High minimum wages, high dropout rates from school, and costly labor rules have given France one of Europe's worst rates of youth unemployment, running at 21% for people aged under 25, according to the OECD. Among immigrant youths, the rate is even higher -- twice as high as among whites, according to one estimate.

A stagnant national labor market that needs few new workers leaves minority applicants prone to discrimination. A recent study by a scholar at the Sorbonne, Jean-François Amadieu, found that a job applicant with a French-sounding name was more than five times more likely to be invited to a job interview than an applicant with the same qualifications but with a North African-sounding name. Some antidiscrimination advocates are calling for employers to use only blind résumés that don't show a name, picture or home address.

"The culture of the banlieues is relatively inconsistent with corporate culture," said Jean-François Bernardin, the president of a French employers' association, in comments reported by Agence France-Presse yesterday.

As in most of Western Europe, jobs in France usually involve long-term work contracts that are difficult for companies to terminate. As a result, employers tend not to take risks with hires from immigrant families for fear of being stuck with them if they don't work out. Laying off a person on a long-term contract can involve costly court settlements.

"It's very difficult for young people" of North African descent to escape unemployment because hiring-and-firing legislation in France is "so much more rigid than in the U.K. or the U.S.," says Gino Raymond, professor of modern French studies at Bristol University in Britain.

About 13% of French youths, including many from minorities, didn't complete high school, further hurting their job prospects. Although the proportion is even higher in Italy and Spain, in France it is compounded by a relatively high minimum wage of more than €1,000 ($1,178) a month. "It's OK to have a minimum wage at 60% of the average wage, but then people must have the skills to match that," says Mr. Torres.

France prides itself on its hourly productivity, among the world's highest. But Philippe Manière, director of the think tank Institut Montaigne, says the high productivity rate is achieved only by shutting out of the job market the immigrants who might cause it to fall. "In France, you employ the most productive people and you leave the rest in the street," he says.

Rigid labor markets aren't the only cause of ethnic minorities' exclusion from a national economy, and certainly aren't a precondition for racial violence. Race riots have periodically shaken U.S. cities, and Britain suffered a wave of rioting involving youths of Pakistani descent in 2001. A report for the British government concluded that a deep sense of alienation from the white majority had fed the unrest.

In Italy and Spain, a relatively high degree of flexibility for companies hiring and shedding lower-wage workers -- combined with major industries that need low-skilled workers -- has helped many immigrants and their descendants to find work.

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