France’s continued Hollande from reality gets a rude wake-up call from America.
With an unemployment rate that’s been hovering around 10% for nearly four years, unemployment benefits that somehow manage to be the most generous in Europe and yet exclude thousands of eligible non-workers, and an attempted tax bracket of 75% on top earners, France clearly isn’t economically serious about domestic jobs. That hasn’t stopped them from being seriously upset at the lack of foreign capital coming to their rescue. Or when that same foreign capital criticizes the famous French non-work ethic.
When Goodyear Tire & Rubber Co’s Amiens Nord plant faced being closed, threatening 1,250 jobs, Paris attempted to mediate a sale to Illinois-based Titan International. Unable to get the French unions to move on any of their conditions, Titan’s owner, Maurice Taylor (last seen running for the Republican presidential nomination in 1996), fired off his answer on any potential purchase:
“The French workforce gets paid high wages but works only three hours. They get one hour for breaks and lunch, talk for three and work for three,” Taylor wrote on February 8 in the letter in English addressed to the minister, Arnaud Montebourg.
“I told this to the French union workers to their faces. They told me that’s the French way!” Taylor added in the letter, which was posted by business daily Les Echos on its website on Wednesday and which the ministry confirmed was genuine.
“How stupid do you think we are?” he asked at one point.
“Titan is going to buy a Chinese tire company or an Indian one, pay less than one Euro per hour wage and ship all the tires France needs,” he said. “You can keep the so-called workers.”
Taylor’s jab on going to China or India has to chafe Arnaud Montebourg, France’s Minister of Industrial Renewal, whose industrial policy has thus far been to scapegoat low-wage competitors. Montebourg even blocked Indian steelmaker ArcelorMittal from buying a French plant in 2012, apparently proving that beggers can be chosers.
Taylor’s brusque reply may dominate the headlines (who are we kidding with ‘may’?), but the real story is France slowly coming to terms with, well, their unemployment terms.
Despite the reputation of being exceptionally generous, which they are, France’s unemployment benefits are reaching fewer and fewer unemployed. Even as unemployment has increased, the percentage of beneficiaries has decreased – 44.8% of those eligible receive benefits, down from 48.5% in 2009. Many eligible are being turned away, a situation brought to greater public awareness when an eligible beneficiary set himself on fire in protest for being declined.
Why are even eligible beneficiaries being told ‘non’? Because as the French government auditor, the Cour des comptes (think of it as the French CBO), recently stated, the system of benefits is “unsustainable”:
The current funding system is expected to reach a deficit of 5 billion in 2013. According to the Cour, the French system is largely to blame for the deficit, as it is much more generous than similar benefits programs in neighboring countries. For example, the current allocation is between 63 and 93 percent of the previous incomes of the unemployed. In addition, the minimum compensation length for unemployment benefits in France is two years, compared to one year in Germany.
Such debts helped France’s credit rating fall to AA1, despite President Hollande’s pledge to reduce the deficit by the end of 2013. With familiar rhetoric coming from another left-leaning politician, it’s little wonder what Maurice Taylor chose to acknowledge in his letter:
Socialist President Francois Hollande may take some comfort in the view Taylor expressed of Washington: “The U.S. government is not much better than the French,” he wrote…