Labour in France and Germany: opposite strategies

Both France and Germany want to maintain a high level of social protection in a globalised economy. But beyond this common goal, everything separates the two countries in terms of the strategy to achieve it: both countries differ quite clearly over the role that is to be played by work in the economy and society.

Via the self-sustaining negotiation of a responsible relationship between entrepreneurs and the workforce, Germany is creating an economy and a society in which labour, and notably qualified labour, for the guarantee of a high level of social protection, lies at the centre of the system and its strategy. For about ten years now Germany has undertaken major social reform whether this is in terms of health insurance, retirement pensions or the functioning of the labour market, all leading to reductions in costs and the maintenance of links with businesses.

Conversely France continues to over tax labour to a certain degree, notably qualified labour, deeming that its economy and its society must revolve around sustained consumption via social transfers. In these conditions it hesitates to undertake in depth reform which would lead to reductions in labour costs and limits its effort to small scale measures, centred on unqualified work.

The dividing line between the two countries, which almost tends towards social anthropology, comprises maintaining the competitive capacity of the productive system in Germany, whilst on the other hand France, is increasing the burden of social charges on businesses. By reducing labour costs and increasing consumer contribution to social protection, Germany has succeeded in increasing growth and reducing unemployment, and at the same time, it has managed to master its public and social spending again. At the end of the day the German strategy has enabled the extension of the means available to social protection.

France however, which is bogged down in a Keynesian, Colbertist mind-set, continues to want to have labour bear the burden of social costs and reduce those of consumption even further. The cumulative process of the loss of competitiveness of French businesses and increasing social costs, beyond all that is reasonable, means that the government is demanding more and more from an exhausted productive fabric.

In Germany the company is both the heart of social integration and a community of shared wealth which has to be protected. This is what explains, in spite of some signs of fatigue in the 1990's, the capacity of the German model to be autonomous and responsible, to forge vital compromises for its own long term survival. Conversely in France, where employers and unions only enjoy residual legitimacy, the State continues to privilege the ring-fencing of a non-tradable sector. Finally Germany makes the most of reality for its social vitality, whilst France camps on denial.

ESO: Information Guide: Employment and Labour Market Policy http://www.europeansources.info/record/information-guide-employment-policy/

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