Paradoxically, the law that provoked millions of French into protesting on the streets was intended to create employment. Unfortunately for the government in general and PM Dominique de Villepin in particular, it was interpreted as having the opposite effect.

This is not altogether surprising because, in order to introduce greater ‘flexibility’ into the labour market and encourage employers to take on more young people, the law was designed to make it easier to fire people. It was to apply to the under-26 age group, among whom unemployment is over 20 per cent, and was seen as having particular urgency after the riots last November in the deprived suburbs of Paris and other cities, where youth unemployment runs at up to 50 per cent.

So, a measure devised in response to localised demonstrations led to mass demonstrations all over France. Joseph Heller, of Catch-22 fame, would have been proud of the now-defunct law: ‘In order to create employment, we must make it easier to fire people.’ The thinking is that employers are reluctant to take on recruits because France’s strict employment laws render it a costly and arduous process to make people redundant. The system has evolved from one of well-intentioned employees’ rights into a cocoon that gives excessive protection to existing employees, systematises inefficiency and effectively discriminates against young, would-be entrants to the labour market.

De Villepin’s proposal was desperately ill conceived. Far from being accepted as a partial solution, it has focused attention on France’s chronic unemployment problem and aggravated discontents.

Thus the law, by definition, would have done nothing about the huge degree of protection afforded to employees aged over 26. It added insult to injury for younger members of the workforce in a country where, as the Canadian academic, Timothy B Smith, has written, ‘every year, over 500,000 young workers are hired as interns, paid nothing or perhaps up to EUR200-300 per month and then dispensed with after a year of full-time labour has been extracted from them.’

As European economist John Gillingham notes, the ‘social exclusion’ of young people, ‘far from being either necessary or inevitable’, resulted from ‘two reversible decisions: to defend the over-valued franc and to protect labour markets. Not globalisation, but rigid protectionist policy-making is what gave rise to les exclus.’ Resistance to globalisation has been much cited as a factor behind the dramatic referendum result on the European constitution a year ago, and the recent disturbances. Yet French firms are a major presence on the international business stage and, contrary to the general impression, there is plenty of foreign investment in France, as an IMF study noted.

The struggle between ‘insiders’ and ‘outsiders’ in the labour market is influenced by over two decades of economic policies that have been in strong contrast to the more expansionist policies in the US and UK. It has been sad to see de Villepin mishandle this crisis so badly. — The Guardian