‘If You Hire This Kid, We’ll Pay His Salary,’ Says France
Unemployment in France is at 23% for people under 25 (in Spain, it’s 52%, in Italy, 34%), and French President Francois Hollande has proposed a plan! He thinks government should pay 75% of new hires’ salaries if they are between 16 and 25. (“The government hopes to create 100,000 of these “contracts for the future” next year and another 50,000 in 2014. It has promised to continue paying its share of the employee’s salary for three years.”) The plan has to go through Parliament, but Hollande’s party is the majority, so it will likely pass!
I think this plan sounds GREAT (jobs for everyone), but economists and entrepreneurs say that it doesn’t address the “real” problem of EVERYTHING IS SO FUCKED, which will require economic reform and a restructure of the labor market. GOOD POINTS BOTH.
Well, it’s not so great for unemployed 26-and-up-year-olds…
I just read an article about this in French and the English article doesn’t mention (unless I missed it) that the jobs are meant for people with few qualifications. So not for the educated. Not entirely surprising but an important detail nonetheless.
OK so the big reason French firms don’t hire young people as full-time workers is, basically, they don’t know if they will be any good. Once you’ve hired someone and they turn out to be lazy or incompetent, it’s very difficult and expensive to get rid of them, so they either A) don’t hire people (France has the most productive workforce in the world for this reason) or B) hire someone with experience, even if it costs more.
By agreeing to pay their salaries, the government is reducing the downside risk to the employer. Even if every single one of these workers is useless, the net economic effect is not much different from a “welfare to work” plan. I, however, predict that there will be positive spillovers and the “graduates” of the program, even if they don’t keep their subsidized jobs, will be considerably more employable in the future.
@stuffisthings The difficult to fire thing is not entirely true anymore. For a permanent contract, employers have a three month trial period, after which the employer can dismiss the employee or the employee can choose to leave without consequences for either of them. Employers who want more time than that sometimes cheat and hire people on a fixed-term contract for whatever length of time they want (although if they do this, the employee is free to leave without consequence if they find a permanent contract.)
After three months on a permanent contract, however, they’re pretty much stuck if they already chose to keep the employee. The only way out of it (save for maybe really obvious negligence) is to lay the person off, after which they can’t hire anyone in the same position for six months.
Also, didn’t we stop talking about how “fucked” European labor markets were when U.S. unemployment skyrocketed ahead of all the big EU economies in 2008-2010 and failed to recover? Remember back in the olden days (2006) when everyone was talking about Germany’s labor market rigidity? And now they have 5.4% unemployment?
People have short memories, I guess. (2006 was also when those same folks were praising Spain and Ireland for their smart fiscal policies…)