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French President Nicolas Sarkozy faces an uphill battle in his re-election fight this Spring.We discussed some of the long odds against him here.
So to jumpstart his re-election, Sarkozy has announced brand new economic reforms that are sure to be controversial.
From The Telegraph:
Under new “competitiveness accords”, employers will now be able to cut or raise working hours and cut salaries to save jobs if a majority of workers approve.
Germany has a famously low unemployment rate, and policies along these lines are frequently stated as a reason for that.
Early last decade, Germany embarked on a scheme called Agenda 2010. The basic tradeoff is this: Workers can’t expect much wage growth, but in return, inflation is held in check, and job safety is a high priority.
It’s worked. In addition to the low unemployment rate, wage inflation is incredibly modest, as this chart from Triplecrisis.com shows.
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People always say, the stated hope for the Eurozone was that everyone would eventually adopt a German-like economy. Well that hasn’t worked in most places, but at least in France, where things are still mostly OK, Sarkozy is trying to go in that direction.