Charles A. Kupchan, CFR’s top expert on Europe, says the continuing demonstrations and protests over an attempt to change the labor hiring laws in France are only symptomatic of a wider political crisis in Europe.
"What we’re witnessing now in Europe—I would point to the riots in France, the [French] "no" vote of the [European] constitution, the efforts of countries to protect their national industries from takeover by companies from other EU nations—is a quite worrisome nationalization of political and economic life in Europe," says Kupchan, senior fellow and director for European Studies. "And it’s taking place in a way that I think is presenting Europe with its greatest political crisis, probably since the end of World War II."
Can you explain why French university students and labor unions are so upset over the law that would give employers the right to dismiss new workers if they’re under twenty-six within two years of employment?
I think there are at least three different layers to this. One of them is about the law itself, and the degree to which students, who already face uncertainty about job prospects, are concerned that this makes it even harder for them to land a stable position. They therefore oppose the idea that they could be employed for a short period before they would enter into a longer-term contract. And so they’re saying conditions are already pretty rough, unemployment nationwide is around 10 percent—among youth about 20 percent—and in minority communities, 40 to 50 percent. They’re saying isn’t this law just going to make it worse rather than better?
The second layer is about a continuing anti-elitist wave that has been brewing. It was reflected in the "no" vote to the European constitution. In some ways, this is a standoff between a very strong centralized French state and a French society that has a long history of pushing back against that state. And [Prime Minister Dominique] de Villepin, [President Jacques] Chirac, [Interior Minister Nicolas] Sarkozy and others are seen as being too removed from the day-to-day needs of the French people, and so this is a kind of a revolt against elitism.
In this particular instance, the students, the unions, and many Frenchmen feel that de Villepin didn’t consult with the unions, he really didn’t consult with parliament, he just put this bill forward and poof, it went through. And now they’re saying this is something that should really be negotiated; we have to have a discussion about it.
Is there a global aspect to this?
Yes. This is the third level which we’re kind of witnessing, at the macro level. The traditional paternalistic welfare states in Europe are up against the pressures of globalization. And it’s happening in France, it’s happening in Germany, and it’s happening in Italy, each in different ways, but it is causing great social and political tensions that result from what are still quite inflexible economies in continental Europe.
It’s manifesting itself in different ways in each of these three countries. In the French case, the problem is this standoff between the state and society. In the German case, in many ways, the state is much more flexible, power is decentralized where it is not in France, but Germany is a very consensus-oriented state, and it’s therefore very difficult to do things that are politically painful. In Italy it’s in some ways the opposite. Italy is a country that thrives on political discord; there is no consensus. The political system is fragmented, and that has created a kind of paralytic backlash against the need for reform. The French riots we’re seeing are one symptom of this broader struggle to adapt inflexible economies to the global marketplace.
There seems a dysfunction to me since it’s the university students who are doing the protesting, but it’s the non-student youth who are most disaffected. The people in the banlieus, in the suburbs, the immigrants—they’re the ones who have no jobs, really. If you’re a graduate of a Sorbonne, you’re going to get a job, I assume.
In some respects, this shift in the job law was targeted at those most in need, and those are the folks in the suburbs, the immigrants, the second- and third- generation immigrants from North Africa and other Muslims. This was a way of making it easier for companies to hire them, because those companies would not be afraid that they would be locking them into lifetime employment. So the French government is actually doing the right thing.
What de Villepin is up to is right from the perspective of addressing unemployment in the immigrant community, and it is right in terms of trying to make the French economy more competitive. The people who are joining the protests from the banlieus, they’re just in some ways taking advantage of the protests to stir up more trouble, because this actually advantages them, it doesn’t disadvantage them. You mentioned the Sorbonne. It really depends. If you talk about a specific number of very elite schools such as the Ecole Nationale d’Administration or Sciences Po, those students tend to come from a very select background. Sorbonne is less so. Sorbonne has a much broader cross-section of socio-economic backgrounds. Even though the Sorbonne is one of the finest institutions, their graduates are not assured of employment. And that’s why I think they are participating in these protests.
Is French labor law that strict? In other words, if you’re a small businessman, you run a small factory and you have thirty workers, do you have to have a very formal contract to hire people?
In general, it’s pretty strict. It’s very difficult to get rid of workers that have been there for any length of time, and the benefits that come with employment in countries like France and Germany are quite considerable. And therefore there are high non-wage costs of labor, i.e. things like pensions, unemployment benefits, and healthcare. So not only are you in a position where it’s very difficult to get rid of workers, you’re also in a position where you are paying high wages to begin with plus very considerable additional non-wage costs.
Now are these benefits paid by the state or by the company? In other words, do you get a pension from the state or from the company?
The company is making contributions to pension systems, and so it’s a combination. And some of the proposals on the table, particularly in Germany, less so in France right now, are to reduce the contributions that the employer makes to some of these programs. The end point is exactly the same as in the French case, that is, to make it easier for companies to hire people. The French are doing this by trying to adjust the permanency of contracts; the Germans are aiming at the non-wage costs of labor.
You mentioned Germany, you mentioned Italy. Are other countries in Central Europe also affected by the same malaise?
Yes. I would say that what we’re witnessing now in Europe—I would point to the riots in France, the "no" vote of the constitution, the efforts of countries to protect their national industries from takeover by companies from other EU nations—is a quite worrisome nationalization of political and economic life in Europe. And it’s taking place in a way I think is presenting Europe with its greatest political crisis, probably since the end of World War II. It is about a kind of new nationalism; it is about a sense of dislocation and disorientation, a loss of identity that comes with globalization and an EU that is now twenty-five-plus populations that are becoming more heterogeneous, particularly with the immigration of Muslims.
There is a kind of populism—in some cases, maybe just overtones—but it’s part of what we’re witnessing here. I think it spells very serious challenges for those European elites who aspire to continuation of European integration. My hope and my guess is that Europe will recover and find its way. I have to say I am more worried about the European project than at any other point in my adult life as an observer of European affairs.
You mean the whole concept of the European Union?
Yes. The project of political and economic integration, the effort to diminish the consequences of national boundaries, the effort to create a pan-European identity that either transcends or at least sits comfortably alongside national identities. Progress on each of these fronts is today being called into question.