EXPECT A MEDIA PANIC ABOUT FRENCH UNEMPLOYMENT
Now that the European elites have lost a major battle in their war on the living standards of the European people, don't expect them to behave as if they have lost the war. What will happen next is that there will be redoubled efforts to achieve radical change at the national level. It's pretty clear already that the focus will be on France's 10.2 percent employment rate - which is virtually the only real reason the elites were able to give as to why the French should have voted for the EU constitution.
What's more, their unemployment rate has already been cited as one of the main reasons why the French allegedly noted 'no' to the constitution - in other words, the result is being spun as an expression of discontent with the Chirac government over persistently high unemployment. However, the reality is that the vote represented a vote against the kinds of neoliberal policies generally touted as the solution to unemployment. There is no evidence that the unemployment rate itself was a major factor in the 'no' result. Indeed, the ability of the French to vote 'no' to a constitution imbued with neoliberal ideology suggests that they simply did not buy the claim that neoliberal reformism amounts to an unemployment reduction strategy. Why, if the French were really voting on the basis of their concerns about unemployment, would they have rejected a constitution which encapsulated the economic ideas which would allegedly reduce unemployment?
There will therefore be mounting panic about the level of unemployment in France, as bit by bit the French are propagandized into believe that tackling unemployment will require nothing less than root-and-branch demolition of the French social model. The beginning of the offensive can be discerned in the first speech made by the new French prime minister, Dominique de Villepin, which made unemployment his priority during his first 100 days in office. 'Villepin said fighting joblessness would be the "big battle" of his team. "I will lead it personally," he said on TF1 television. "We can no longer accept more than 10 percent unemployment in our country."' (SOURCE)
What will be missing from the coming panic will be any critical input into the debate over unemployment. No one will ask the two really significant questions, which are 1) whether countries which have implemented neoliberal reforms aimed at reducing unemployment actually do have lower unemployment rates than countries with high levels of social protection such as France; and 2) whether pursuit of a short-term goal (in this case, reducing unemployment by what at best could be a couple of percentage points) justifies reforms so far-reaching that they would change the lifestyles of the French and even the face of France itself forever.
Although the French 10 percent figure receives a great deal of attention, it is not obvious that this figure is all that bad. What has to be taken into consideration is hidden unemployment - i.e., the substantial proportion of unemployment which has been transmuted into inactivity or which has been disguised by devious statistical strategies, such as counting people who work as little as an hour a week as if they were employed. Australian economist Frank Agbola has estimated French unemployment for the period 1980-2001, and finds that while the average unemployment was 10 percent, adding in hidden unemployment increases the rate to 14.2 percent (Table 2). Although this is high, it is still lower than the equivalent figure for Spain (22.4 percent) and Canada (18.4 percent). (Figure 6 also shows that total - official plus hidden - unemployment has been falling in France since 1998.)
The reason why France's unemployment rate is not so bad is that the country suffers from lower hidden unemployment than the English-speaking countries and the Netherlands, all of which boast lower official unemployment rates. The reason for this, in turn, is that the English-speaking countries and the Netherlands have indulged in extensive manipulation of unemployment rates, not least by shifting significant proportions of the unemployment to the disability lists. Although the U.K.'s official unemployment rate is among the best in the EU, this is partly because it has a higher proportion of its unemployed on disability than in other countries. As David Webster writes:
The UK has the highest rate of working age sickness of all 15 European Union (EU) countries. The UK rate of 7.0% compares with only 2.1% in Germany and 0.3% in France.* FIGURE 3 shows that, as commentators frequently point out, Britain compares favourably with the rest of the EU in terms of ILO unemployment, with 8 countries having a higher rate. But if the working age sick were to be added to the unemployed, Britain would become the third worst, after Finland and Spain.
It is far from clear, therefore, that France has a worse unemployment rate than the U.K. If the opposite is in fact the case, as I believe, then this is a very good reason why, if they wish to reduce their unemployment rate, the French should steer clear of neoliberal reforms. Wherever they have been implemented, neoliberal reforms lead to a marked growth in hidden and precarious unemployment. In terms of the overall cost to society, the net benefit is small or non-existent.
To show how very misleading the U.K. unemployment rate is, Webster uses the "Want Work Rate" (WWR). This figure is the sum of the official (ILO) unemployed and the economically inactive wanting work divided by the sum of all those in work or wanting work. He writes:
In 1999, France had almost exactly the same WWR as the UK (13.0% compared to 12.9%). But France counts 91% of people not in work but wanting work as ILO unemployed, compared to the UK’s 44%. This, together with the evidence cited earlier, strongly suggests that France is much better off in labour market terms than the UK. Because it has held on to the Beveridge principle of adequate unemployment benefits, it has maintained its unemployed people in a state of greater social inclusion and better health; and, whether overall worklessness is compared in terms of the WWR or of the sum of the ILO unemployed and the working age sick, this has led to a true rate of unemployment which appears to be no worse than Britain’s and may well be better.
In short, France's real unemployment rate is higher than 10.2 percent but it is not necessarily higher - and probably is not higher - than the rates of countries like the U.K. and the Netherlands which have implemented labour market and welfare reforms of the sort which, it is claimed, are required to reduce France's unemployment rates. As Chirac said himself a few years ago, “[I]f unemployment is lower in Britain than in France, it owes no thanks to the virtues of economic liberalism but because the English fiddle their figures.” (SOURCE).
If further neoliberal reforms were implemented in France, the gains would be entirely illusory. The desired reduction of the unemployment rate would be achieved mainly by transferring the unemployed to other categories. To be sure, some people would make the transition from unemployment to precarious employment, but the numbers would be relatively small and in any case this would only have disastrous long-term effects by eroding the foundations of France's 'stunningly good' lifestyle. There is no evidence that the remedy would be any better than the disease. Nor is it a foregone conclusion that such reforms would enable France to attract more foreign direct investment as a means of stimulating job creation. In this respect, it is hard to envisage the country doing much better than it is doing now. After all, France is already the 3rd largest recipient of FDI, as this UNCTAD diagram shows (figures are billions of US dollars):
My conclusion is that the French should grit their teeth and endure their present unemployment rate until the political will exists to implement a serious response to unemployment. They should not let their legitimate concern with unemployment be exploited as an opportunity for the wholesale destruction of a social model which ranks among the most widely admired in the world.
*In another passage, Webster points out that 'At Spring 2000 just over a third (34.1%) of the 2.3m working age inactive sick in Great Britain said they wanted to work. As a proportion of the UK working age population, this is more people than are inactive sick in total in Germany or France. If these people were counted as unemployed, they would add 2.7 percentage points to the UK ILO rate, bringing it to the same level as Germany.' Social research has established that most inactive sick would prefer to work if suitable jobs - i.e., jobs that took account of their health problems - were available. In a hypercompetitive, neoliberal economy, of course, people with health problems go to the back of the jobs queue - perhaps even behind healthy jobseekers with criminal records.
What's more, their unemployment rate has already been cited as one of the main reasons why the French allegedly noted 'no' to the constitution - in other words, the result is being spun as an expression of discontent with the Chirac government over persistently high unemployment. However, the reality is that the vote represented a vote against the kinds of neoliberal policies generally touted as the solution to unemployment. There is no evidence that the unemployment rate itself was a major factor in the 'no' result. Indeed, the ability of the French to vote 'no' to a constitution imbued with neoliberal ideology suggests that they simply did not buy the claim that neoliberal reformism amounts to an unemployment reduction strategy. Why, if the French were really voting on the basis of their concerns about unemployment, would they have rejected a constitution which encapsulated the economic ideas which would allegedly reduce unemployment?
There will therefore be mounting panic about the level of unemployment in France, as bit by bit the French are propagandized into believe that tackling unemployment will require nothing less than root-and-branch demolition of the French social model. The beginning of the offensive can be discerned in the first speech made by the new French prime minister, Dominique de Villepin, which made unemployment his priority during his first 100 days in office. 'Villepin said fighting joblessness would be the "big battle" of his team. "I will lead it personally," he said on TF1 television. "We can no longer accept more than 10 percent unemployment in our country."' (SOURCE)
What will be missing from the coming panic will be any critical input into the debate over unemployment. No one will ask the two really significant questions, which are 1) whether countries which have implemented neoliberal reforms aimed at reducing unemployment actually do have lower unemployment rates than countries with high levels of social protection such as France; and 2) whether pursuit of a short-term goal (in this case, reducing unemployment by what at best could be a couple of percentage points) justifies reforms so far-reaching that they would change the lifestyles of the French and even the face of France itself forever.
Although the French 10 percent figure receives a great deal of attention, it is not obvious that this figure is all that bad. What has to be taken into consideration is hidden unemployment - i.e., the substantial proportion of unemployment which has been transmuted into inactivity or which has been disguised by devious statistical strategies, such as counting people who work as little as an hour a week as if they were employed. Australian economist Frank Agbola has estimated French unemployment for the period 1980-2001, and finds that while the average unemployment was 10 percent, adding in hidden unemployment increases the rate to 14.2 percent (Table 2). Although this is high, it is still lower than the equivalent figure for Spain (22.4 percent) and Canada (18.4 percent). (Figure 6 also shows that total - official plus hidden - unemployment has been falling in France since 1998.)
The reason why France's unemployment rate is not so bad is that the country suffers from lower hidden unemployment than the English-speaking countries and the Netherlands, all of which boast lower official unemployment rates. The reason for this, in turn, is that the English-speaking countries and the Netherlands have indulged in extensive manipulation of unemployment rates, not least by shifting significant proportions of the unemployment to the disability lists. Although the U.K.'s official unemployment rate is among the best in the EU, this is partly because it has a higher proportion of its unemployed on disability than in other countries. As David Webster writes:
The UK has the highest rate of working age sickness of all 15 European Union (EU) countries. The UK rate of 7.0% compares with only 2.1% in Germany and 0.3% in France.* FIGURE 3 shows that, as commentators frequently point out, Britain compares favourably with the rest of the EU in terms of ILO unemployment, with 8 countries having a higher rate. But if the working age sick were to be added to the unemployed, Britain would become the third worst, after Finland and Spain.
It is far from clear, therefore, that France has a worse unemployment rate than the U.K. If the opposite is in fact the case, as I believe, then this is a very good reason why, if they wish to reduce their unemployment rate, the French should steer clear of neoliberal reforms. Wherever they have been implemented, neoliberal reforms lead to a marked growth in hidden and precarious unemployment. In terms of the overall cost to society, the net benefit is small or non-existent.
To show how very misleading the U.K. unemployment rate is, Webster uses the "Want Work Rate" (WWR). This figure is the sum of the official (ILO) unemployed and the economically inactive wanting work divided by the sum of all those in work or wanting work. He writes:
In 1999, France had almost exactly the same WWR as the UK (13.0% compared to 12.9%). But France counts 91% of people not in work but wanting work as ILO unemployed, compared to the UK’s 44%. This, together with the evidence cited earlier, strongly suggests that France is much better off in labour market terms than the UK. Because it has held on to the Beveridge principle of adequate unemployment benefits, it has maintained its unemployed people in a state of greater social inclusion and better health; and, whether overall worklessness is compared in terms of the WWR or of the sum of the ILO unemployed and the working age sick, this has led to a true rate of unemployment which appears to be no worse than Britain’s and may well be better.
In short, France's real unemployment rate is higher than 10.2 percent but it is not necessarily higher - and probably is not higher - than the rates of countries like the U.K. and the Netherlands which have implemented labour market and welfare reforms of the sort which, it is claimed, are required to reduce France's unemployment rates. As Chirac said himself a few years ago, “[I]f unemployment is lower in Britain than in France, it owes no thanks to the virtues of economic liberalism but because the English fiddle their figures.” (SOURCE).
If further neoliberal reforms were implemented in France, the gains would be entirely illusory. The desired reduction of the unemployment rate would be achieved mainly by transferring the unemployed to other categories. To be sure, some people would make the transition from unemployment to precarious employment, but the numbers would be relatively small and in any case this would only have disastrous long-term effects by eroding the foundations of France's 'stunningly good' lifestyle. There is no evidence that the remedy would be any better than the disease. Nor is it a foregone conclusion that such reforms would enable France to attract more foreign direct investment as a means of stimulating job creation. In this respect, it is hard to envisage the country doing much better than it is doing now. After all, France is already the 3rd largest recipient of FDI, as this UNCTAD diagram shows (figures are billions of US dollars):
My conclusion is that the French should grit their teeth and endure their present unemployment rate until the political will exists to implement a serious response to unemployment. They should not let their legitimate concern with unemployment be exploited as an opportunity for the wholesale destruction of a social model which ranks among the most widely admired in the world.
*In another passage, Webster points out that 'At Spring 2000 just over a third (34.1%) of the 2.3m working age inactive sick in Great Britain said they wanted to work. As a proportion of the UK working age population, this is more people than are inactive sick in total in Germany or France. If these people were counted as unemployed, they would add 2.7 percentage points to the UK ILO rate, bringing it to the same level as Germany.' Social research has established that most inactive sick would prefer to work if suitable jobs - i.e., jobs that took account of their health problems - were available. In a hypercompetitive, neoliberal economy, of course, people with health problems go to the back of the jobs queue - perhaps even behind healthy jobseekers with criminal records.
