His ideas are based on two simple but accurate diagnoses of France’s economic decline in the past 30 years.
First, France does not work enough. Young people enter the workforce late; experienced people retire early; the standard working week is now just 35 hours. France works an average of just over 600 hours per inhabitant per year, taking into account all the people not in work; Britain 800 hours. Result: slow growth, low incomes and high unemployment.
Yes, he really did blame high unemployment on the number of people not in work. As it turns out, French people (if Lichfield’s figures are right) work 25 per cent fewer hours than the British, however, that includes the hours of potential work lost to joblessness. Of course, this is quite a valid reason to object to unemployment – it’s literally a waste of time, but this isn’t what he’s getting at. He seems to suggest that if only the others would work harder, they would either generate enough supply-which-creates-its-own-demand to create more jobs, or else they would spend enough extra income to create more aggregate demand and create more jobs.
Current UK unemployment is 5.5 per cent, French 8.4 per cent – so just over a third (34 per cent) greater. All other things being equal, you’d expect the hours gap to change pro-rata with the unemployment gap – that is, if like the Indy, you are stupid enough to contaminate your proposed cause with a measurement of effect. But clearly something is not equal. If the greater quantity of worklessness is too great to explain the lesser quantity of work, the excess must have been cancelled out by something – which can only be that the people in work are working harder.
This weekend’s election results in Serbia, and in particular the gridlock state of the political process and the resilience of the vote for the nationalist Serbian Radical Party (as ably explained by Doug in the previous post), pose new, and arguably reasonably urgent questions for all those who are concerned about the future of those European countries who currently find themselves locked outside the frontiers of the European Union. What follows below the fold is a cross-post of an entry I put up earlier this afternoon on the new global economy blog: Global Economy Matters. I don’t normally like cross-posting, since I would prefer to put up original Afoe content, but my time is a bit pressed at the moment, and I feel the issues raised are important enough to merit a separate airing on this site. Continue reading →
The OECD estimates the current potential capacity growth rate of the Italian economy at 1.25% a year. Actually I suspect even this very low number is over-optimistic. Growth since 2002 has been as follows: 2003 – 0.1%: 2004 – 0.9%: 2005 – 0.1%. To be sure forecast growth for this year is somewhat higher, at 1.4%, and optimists are expecting this to be more or less repeated next year. But I suspect this outcome is unlikely simply because the global economy now seems to be slowing (and in particular the ever important US economy),so the strongly advantageous situation of 2006 is unlikely to be repeated, while next year the Italian government has promised to introduce an important package of spending reductions which are bound to negatively affect growth, at least in the short term..
Well, I just lost a long post about the so-called Swedish model due to my own stupid carelessness the combined malevolence of Windows XP and MS Word.
Anyway, the main point was to say that the article on the subject (free for non-subscribers) in last week’s issue of The Economist was really a dishonest hack job. And my critique went roughly like this : Continue reading →
Since the withdrawal of the CPE and the resulting collateral damage to Dominique de Villepin, not to mention Nicolas Sarkozy’s unexpected appearance as a unity figure at the height of the crisis, it’s rapidly being promulgated as conventional wisdom that France “is ungovernable”/refuses to “reform”/cannot be “reformed”. There is only one problem with this discourse, very popular in anglophone leader columns and the like, which is that it’s nonsense.
It’s quite often been raised here on AFOE that the French economy isn’t actually in trouble. Growth, although not great, is ticking along, inflation is controlled, unemployment is higher than the UK but lower than Italy or Germany, and the demographics (as Edward Hugh will no doubt point out) look a lot better than many other countries. Certainly, there’s more youth unemployment than one might like, but almost all the figures for this are wildlymisleading. The percentage rate of unemployment in the 15-24 years age group looks scary high, but is actually a very small percentage of that groupâ€“because most of them are in education or vocational training of some form and hence not part of the labour force. Unemployment as a percentage of the age group is rather lower than the national rate and not much different from that elsewhere in Europe. (Le Monde ran a useful little chart of this in a supplement yesterday that doesn’t seem to be on the web.) Much – indeed most – of the difference in employment growth between France and the UK in recent years has been accounted for by the UK government going on a hiring binge.
Before moving in to the nitty-gritty of flexicurity; what it is and whether it can work as a universal European labour market model I should take the time to thank the AFOE team for allowing me a spell as a guest-writer here at the blog in the coming two weeks. In terms of presentation my name is Claus Vistesen and I am a Danish student at the BLC program at Copenhagen Business School. For further info I invite you to visit my personal blog Alpha.Sources, which deals with a wide range of topics of my interest.
Looking to the north we find the Nordic countries who seemingly have the best of two worlds; low uemployment coupled with a high degree of security but what is it exactly that the Nordic countries are doing, and could others potentially follow their example? Continue reading →
The FT today has an article about how long-term youth unemployment is now back at 1998 levels despite a 5 billion pound benefits-to-jobs programme . Now if you go to this url, and have a look at the population pyramids for the UK you might begin to see part of the explanation for why this is happening. The cohorts now entering the UK labour market are slightly thicker than the previous ones. Coincidentally I have just put up a post on Afoe which mentions Richard Easterlin’s disadvantaged cohort theory. What is happening in the UK at the present time would, IMHO, be a good example of the Easterlin effect at work.
Long-term youth unemployment has returned to about the level it was when the governmentâ€™s flagship New Deal was introduced in 1998, casting doubt over the value of the Â£5bn benefits-to-jobs programme.
The sharp rise in long-term youth unemployment, which has increased by 60 per cent since its low point two and a half years ago, was revealed by figures from the Office for National Statistics yesterday.
Turning to economic causes, many analysts have pointed to mass youth unemployment as the main cause of the political unrest in low-income suburbs. The numbers are striking: the French unemployment rate reached 21.3% in the 15-24 age bracket in 2004, vs. 13.4% for the OECD as a whole. However, the headline unemployment rate is misleading because, at the same time, the participation rate of the 15-24 age group is particularly low in France: 37.5%, vs. 49.9% in the OECD. Practically, this means that 7.8% of the population aged between 15 and 24 is unemployed in France, vs. 6.5% in the OECD. The difference is not that large. What makes France different from other countries is the very low participation rate of young people, not particularly massive unemployment. In other words, the young in France take fewer jobs than their counterparts in other developed countries……”
“That brings us to a more fundamental point: why is it so difficult to create jobs in France? I have discussed this point in a previous note (â€œMaking France Workâ€, June 21, 2005). In my view, the causes of the job disease fit reasonably well with the â€œinsider-outsiderâ€ model developed by labor economists, provided that it is extended to products and services markets. I will elaborate only on labor market issues, starting with the minimum wage, which I believe is the major hurdle to job creation for young and less skilled workers. However, highly regulated product and services markets, which allow various interest groups to keep markets closed to competition and thus reduce employment opportunities, are another important cause of the job disease……….”
“Marty has something of a tin ear for politics, and that would be a problem in the Fed chairman’s job,” says William Niskanen, who followed Feldstein as head of the President’s Council of Economic Advisers in 1984 and is now chairman of the Cato Institute, a free-market research group in Washington.
Feldstein finished second only to Ben Bernanke, chairman of the White House Council of Economic Advisers, when 104 financial professionals were asked last month to name Greenspan’s most likely successor. Bernanke got 38 percent of the vote and Feldstein 31 percent in the survey, which was conducted by Stone & McCarthy Research Associates, a Princeton, New Jersey, consulting company. No other candidate received more than 10 percent. Continue reading →
I just put up a post on the economic situation of Finland. Now I am putting another. Why the sudden interest? What is there about the Finnish economy which could be of interest to more people than the five million or so who actually live there? Continue reading →