Krugman delivers an instant classic with yet another paean to the glories of Europe in general and France in particular. His gist - careful cherry-picking of statistics while standing on one foot and hopping leads to the conclusion that Old Europe is a jobs dynamo. Really:
SINTRA, Portugal — I’ll be spending the next couple of days at a forum sponsored by the European Central Bank whose de facto topic — whatever it may say on the program — will be the destructive monetary muddle caused by the Continent’s premature adoption of a single currency. What makes the story even sadder is that Europe’s financial and macroeconomic woes have overshadowed its remarkable, unheralded longer-term success in an area in which it used to lag: job creation.
And why is this a Tale Untold?
What? You haven’t heard about that? Well, that’s not too surprising. European economies, France in particular, get very bad press in America.
If only somewhere in America were media outlets sympathetic to Big Government and progressive programs. Instead, we poor and huddled Americans are subjected to a steady diet of right-wing rags like, well, the NY Times with this sort of Franco-bashing titled "Young, Educated and Jobless in France".
But wait! We should deplore this false notion that youth unemployment among recent college grads, as described in the Times, is a problem. Back to the Earnest Prof:
But Northern European nations, France included, have done far better than most Americans realize. In particular, here’s a startling, little-known fact: French adults in their prime working years (25 to 54) are substantially more likely to have jobs than their U.S. counterparts.
Youngsters have better things to do.
Now, young French citizens are still a lot less likely to have jobs than their American counterparts — but a large part of that difference reflects the fact that France provides much more aid to students, so that they don’t have to work their way through school. Is that a bad thing?
Well, let's see. This capitalist tool, the Christian Science Monitor, describes some recent French labor market "reforms" from 2013:
Businesses in France have long faced a hostile environment at home, with the country’s rigid labor laws among their chief complaints... So it may have seemed like progress last month when France’s Socialist president, François Hollande, forged a labor reform pact between his government, a majority of France’s trade unions, and the employers’ organization. Yet it can hardly be considered a success.
Instead of introducing needed flexibility into France’s rigid labor market, the agreement merely tinkers around the edges. Moreover, labor laws aren’t the only reason why France trudged through 2012 with zero percent growth. French economic policy operates under a destructively myopic view on business that underlies France’s economic stagnation.
A sampling:
First, firms still cannot lay off workers to improve competitiveness when the business is healthy; they can only make economic dismissals to preserve competitiveness when already in financial straits. In France, it ought to be legal to fix small problems before they become big.
Second, businesses remain obligated to assist laid-off employees in finding other jobs and in retraining them for their new positions – a distinctly French phenomenon. For businesses with more than 1,000 employees, this limbo period before dismissal can last from four to nine months.
Third, reform merely reduces the period for laid-off employees to legally challenge their dismissal from five years to two. Some progress! Not only does 1 in every 4 French employees bring a case to court, but French labor courts are the least business-friendly in Europe, with employers losing 75 percent of cases, according to the Organisation for Economic Co-operation and Development.
The agreement also increases taxes and fees for hiring workers on temporary contracts. This hits businesses hard because 8 of every 10 new hires are on these contracts, according to French Labor Ministry estimates. This was a union demand to discourage the use of temporary work, which is a competitive threat to union-protected permanent contracts.
The upshot - firms hire on a temporary basis but are reluctant to offer what amount to jobs for life. Hence, the inability of young people to get a permanent job.
The FT had more:
Structurally, France faces severe challenges. As in many other European countries, youth unemployment is running at some 25 per cent. But the employment rate among those aged 55 to 64 is also among the lowest in the EU at under 50 per cent. Long-term unemployment is at more than 41 per cent of the total.
In the face of these issues, business has demanded a significant relaxation in some of the restrictive features of the labour regime, widely regarded as one of the most rigid in Europe, offering strong protection for those in jobs but tending to shut out those trying to get in – especially those with low qualifications.
Much attention is focused on the near-disappearance of long-term contracts for new workers. Largely because of employers’ fear of not being able to reduce numbers in a downturn, 90 per cent of new jobs are instead on fixed term contracts.
Some 21m fixed term contracts were signed in 2012, including 14m of under one month’s duration, according to Eric Heyer, an economist at the French Economic Observatory think-tank. Many of these are not renewed, he says. “Flexibility exists in France, but it all falls on short-term and interim contracts.”
Even where employers do take people on, the rules tend to discriminate against the inexperienced.
“You have to employ people with ready-made skills who you are sure will fit straight into the job,” says Mr Malenfer. “You can’t afford not to. It is a colossal hindrance to hiring youngsters.”
The Koch-owned (OK, Bezos) Washington Post dropped the Euro pom-poms for a different angle:
Why the U.S. has a lower rate of working women than Europe does
Their answer - more generous maternity leave in Europe has promoted female workforcer participation, with a downside:
But the United States doesn't falter in every work-life area. Blau and Kahn found that much of the participation difference between the United States and other countries is attributable to higher rates of part-time work in Europe relative to the United States. Their numbers showed that 13.1 percent of American women work part-time, compared with a non-U.S. average of 26 percent. And while the incidence of part-time work is falling in America, it's rising slightly abroad. Overall, Blau and Kahn found, 55 percent to 65 percent of the job gains prompted by more generous family leave policies are in part-time work. Given that part-time workers are often paid less and have fewer benefits than full-time labor, that's a significant caveat.
American women are also far more successful than their foreign counterparts in attaining positions of authority in companies. Men and women are equally likely to be managers in the United States, the researchers found, but women are half as likely to fill that role in other countries. In all countries, women are more likely than men to hold "professional" positions as doctors, lawyer, and so forth, but the gap is wider in the United States than elsewhere.
Had Krugman looked he might have found that part-time clue buried in this BLS survey of international labor markets at Chart 2.7. Krugman lauds The Netherlands and links to a chart which lists Switzerland at the top and The Netherlands near it in workforce participation among the 25-54 set; mssing is the info that in the Netherlands, 18 percent of men and 46 percent of women counted as part-time workers in 2010; the comparable figures in the US are 8 and 18.
Krugman's effort might have been interesting if he had identified the particular policy prescriptions that have made France so worthy of emulation. Should the US try to boost employment among the 25-54 set by making youngsters unemployable? Would encouraging age discrimination and raising the unemployability of the 55-65 group be a good step forward?
Instead he closes with a faith-based prayer:
The truth is that European-style welfare states have proved more resilient, more successful at job creation, than is allowed for in America’s prevailing economic philosophy.
ELSEWHERE IN THE TIMES: Someone forgot to tell the French they are coming up aces.
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