French Bureaucracy To Swell
August 21, 1997
France's new socialist government proposes to cure its youth unemployment problem by hiring 350,000 people under age 30 as civil servants. Observers say such cosmetic cures have been tried often before and inevitably failed. They see the prospect no different this time.
- One in every four people under age 30 and not in school or training is without a job -- double the U.S. rate.
- The plan is supposed to cost $5.6 billion over the next five years.
- Critics say the expenditure will jeopardize plans to lower the nation's deficit-to-GDP ratios which is crucial to meeting the criteria for entry into the European Union.
- Businesses, already heavily taxed, are betting that the cost of all those civil servants will be passed along to them.
France's effective tax rate at the corporate and personal level combined is 65.4 percent. Businesses must pay workers a minimum wage of $6.31 an hour -- $1.16 over the U.S. minimum.
Economists say that if France would ease the regulatory and tax knot it has tied around its business community, and get rid of the minimum wage, those 350,000 youthful civil servants might be swept up into the private sector.
Source: Perspective, "Curing the French Disease," Investor's Business Daily, August 21, 1997.
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