French Law Rings in New Year by Sealing EU’s Doom

Around the turn of the century I was in Europe in the summer marveling at people all around me with six weeks’ vacation. I asked Europeans and Americans – In an increasingly global market, how do Europeans compete with the Chinese who never take vacation (an obvious exaggeration – you get the idea). They had no answer.

A hotel room in French Polynesia – many of them have a glass coffee table with a movable top, allowing you to feed the fish from your room.

Some years later, Europe dragged the world into a financial crisis more than once. There is lots of room for debate on the reasons but if government overregulation is the enemy of business – European government is at war with company profits.

The U.S. and UK have seen successful populist uprisings as a result poor trade deals and laws which make their companies far less competitive than those in non-western countries.

Just what is an example of a law which will lead to far less employment? As luck would have it, France just passed one which takes effect in the new year. The right to disconnect. Basically workers in France with more than 50 workers can negotiate with their employer for the right to ignore their devices after work hours. Germany passed a similar rule some years back.

Why is this law about as stupid as any law can be? The reason they are passed according to politicians, are to avoid employee burnout. The politicians acknowledge that such laws hurt companies which is why they only impose it on organizations with 50 or more people.

So smaller companies are spared from the rule but top workers may avoid such companies because they aren’t able to negotiate. In other words, smaller companies are permanently hurt by such laws. As a result, there is less competition in the market. When there is less competition, the upward pressure on wages decreases.

So with one dumb law the French authorities have lowered the competition for workers and reduced productivity for the entire population. Way to go.

Here is the bottom line – when a company is looking for the best place to set up shop, taxes, regulation and workforce productivity are what they look at.

If I am right – and the logic above seems fairly infallible, France will see decreased employment as a result of this new rule, the populist uprising in the country will increase and France could break away from the EU. This was #36 from my list of 2017 predictions from earlier this month. We’ll see what happens… Keep in mind, 82% of the French think their country is heading in the wrong direction. And by the way, Happy New Year!!

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