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.
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.
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