The stiff trade union opposition to the French Government’s modest labour reform proposals will lead to significant problems in the Eurozone.
Daniel Mahoney, Head of Economic Research at the Centre for Policy Studies, comments:
“The French government has made a series of modest proposals, which would bring France’s labour laws in line with countries such as Germany and Switzerland.
“Reform to France’s stringent labour laws is desperately needed. France’s punitive laws are leading to the increasing use of temporary contracts and are partly responsible for France’s high unemployment.
“The government has already made significant concessions and it would appear that further concessions may also be in the pipeline due to the scale of unrest across France.
“If even these reforms are passed their impact is now likely to be fairly modest. This is bad news for the Eurozone. The growing competitiveness gap between France and Germany will likely grow yet further and lead to continuing imbalances between the Eurozone’s two most important economies.”