Even the French Sometimes Understand When They Are Wrong

I’ve written in the past about how governments can really mess things up with new laws and regulations when “The Law of Unintended Consequences” kicks in. Usually, nothing is done to correct these mistakes. But the French are in the process of overturning one of their biggest boo-boos.

It started about five years ago when unemployment was running in the double digits in France. The Socialist government, in power at the time, had a plan to get more jobs for the country. It was simple. It was direct. And, it didn’t work. In fact, just like what often happens under “The Law of Unintended Consequences” it had just the opposite affect.

I saw what happened at the time. We did a manufacturing plant for a French company that fled France, moving their production to Illinois because of the changes that the French government made in their work rules.

And what were these changes? And why didn’t they work?

The Socialist government decided that if x number of people were working under a 40 hour week, then if the work week were cut to 35 hours/week, approximately 10% more people would be working. Even more, they banned overtime and also did not let anyone have a second job. Voila!!! Unemployment would become a thing of the past. Unfortunately, they forgot about the laws of economics and productivity. It not only didn’t work. It bombed miserably, as our small project wasn’t the only French company that decided to move production out of France.

This past week France’s conservative-dominated National Assembly voted overwhelmingly to end the bold social experiment of shorter workweeks. With unemployment continuing above 10%, declining competitiveness and companies fleeing, France is going back to a 39 hour workweek. France still has other serious productivity and tax problems, but this is a step in the right direction to try to regain a competitive footing.