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Opinion article from the Economist:

…Yet the striking feature of the latest protest movement is that this time the rebellious forces are on the side of conservatism. Unlike the rioting youths in the banlieues, the objective of the students and public-sector trade unions is to prevent change, and to keep France the way it is. Indeed, according to one astonishing poll, three-quarters of young French people today would like to become civil servants, and mostly because that would mean “a job for life”. Buried inside this chilling lack of ambition are one delusion and one crippling myth.

This comes from this article in the Economist: http://www.economist.com/opinion/displaystory.cfm?story_id=6744226

 

 

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[quote user="sommebay"]

Opinion article from the Economist:

the objective of the students and public-sector trade unions is to prevent change, and to keep France the way it is...... chilling lack of ambition

[/quote]

 

Just what I've always said myself.  [;-)]

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I was just going to ask a question on the riots in France. I'll put it in this thread as it is linked.

I don't really understand what the big deal is about this change in law. According to the Bias Broadcasting Corporation (BBC) web site, the terms laid out look pretty good to me. So the probation period is 2 years, but they're still on full pay and they still have to be given 2 weeks notice before 6 months is up, and a months notice after 6 months. Sounds like the conditions of any job I've had, apart from the fact no reason needs to be given to terminate. If these people have no job anyway and this helps them get a job, then surely it's got to be better? Not sure what I'm missing here. I can understand that job security is less, but really there is no such thing as job security nowadays anyway.

Have I missed something or is the BBC leaving something out as per usual?

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The coverage in the US

and British press has been so bad that I am not surprised that some people are shocked by the

seemingly irrational behavior of the French.

Most of the coverage that  I have seen is

either wilfully ignorant or purposedly lying, and they repeat a number

of falsehoods about the French labor market that are, quite simply,

shocking.

Let me try to correct the record.

The youth unemployment rate is extravagantly high

The unemployment rate for the under 24s in France

is indeed 23%. But you have to remember that the unemployment rate is

the ratio of unemployed to active

population (i.e. those working or seeking work). Counted as a ratio to

the overall youth population, unemployment is 8.1%, while it is 7.6% in the UK.

It's impossible to fire people in France

Eurostat indicates that the main indicator to assess the flexibility of

a labor market and the mobility of workers is the proportion of workers

who have been in their job for less than 3 months. That proportion is

6.7% in France, higher than in the UK and than the 4.9% EU average.

France does not create jobs

Between 1996 and 2002, according to OECD, France actually created more jobs than the USA in the private sector, and more jobs both overall and in the private sector than the UK - precisely at the time when supposedly irrational measures like the 35-hour week were in force.

This is not to say that everything is perfect, far from it, but the

problem is much smaller than everybody (including in France!) is led to

believe.

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One of the main issues is that this was introduced 'under the table' a rather quaint Frencch tradition where by you can make a law/rule without ANY political or public debate. A loverly thing De Gaulle dreamt up while wanting to become dictator of France, him being such a great war hero and all rather aided his plans.

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there is no such thing as job security nowadays anyway.

I have met with functionnaires on many occasions, I have worked with french colleagues who have the the 'CDI' (aka job for life) and as soon as they have this type of contract they literally sit behind their desks and don't give a ***k!  They tend to not care about what they do either, do not volunteer information unless asked for specifically and so on.... therein lies french culture.  Of course I am generalising profoundly, but in essence it is true.

It is possible to fire people too, but believe me it is very difficult and every french person knows their rights to the letter, the employers do too. However, the costs of employing someone in France are incredibly expensive -literally what is paid in one's salary are paid out in costs via thec ompany to governmental coffers. It is is just basic economics.    In my opinion the new law does not go far enough, it should be easier to fire anyone  and if the state benefits were'nt so good, there would be more people to fill the shoes of those who did'nt give a ***k!

Free market enterprisee +market forces+ governmental incentives- reduction of welfare= thriving economy.

I really should be out on Saturday night should'nt I. :-)

Deby

 

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Yes you should, Deby!

Saturday night is not the night to be telling home truths about France.  Looks like you got away with it though! [:-))]

Lynda&Richard, there were a couple of recent discussions on the CPE, here's one.  Fear not, it is very short.

http://www.completefrance.com/cs/forums/649620/ShowPost.aspx 

A word of advice - don't even try discussing your angle on it with French people.  The merest whiff of making life easier for employers will have you branded as a liberal, capitalist, Thatcherite Anglo-Saxon, and this is not a Good Thing! [;-)]

 

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One more dymanic to add to the (rapidly boiling!) pot.

On a recent survey, guess which state had the highest level of productivity?

Well, France, actually!

Whilst I do agree about "Jobs for Life", it is surely the same in many places? British civil servants, for example, are not exactly noted for their energetic devotion to the cause: which I would define as serving the public who pay them! And recently, they blackmailed Teflon Tony's apology of a government into granting them a special dispensation on pensions. Nice.

Whilst I further agree that employers need some level of flexibility in hiring workers, France does need to avoid the Hire & Fire situation of the USA, which has led to rafts of both Blue and White collar workers being compelled (by the flexible jobs market) to take short-term contracts or work of a menial nature (popularly called McJobs in the USA). The UK isn't far being. Thatcher de-energised the Employment Protection (Consolidation) Act 1978 and doubled the qualifying work period to two years.

It is a fact that globalisation has caused a huge upswing in M & A (Mergers and Acquisitions) which has led to massive redundancies. It is a further fact that executives, whilst paying themselves obscene compensation, have run many large (and sometimes famous) corporations into the ground, mainly due to the executives' incompetence: the workforce have suffered considerably, including loss of pension etc.

One has to remember, that France is basically a socialist state and very much a workers' state, too.

Yes, the cost of employing people is very high: in the UK it's not, mainly because government succeeded in a cynical ploy of making the labour market a more attractive proposition to foreign investors who were then able to exploit people.

In macro-economic terms, one has three fundamental choices: make the people pay for the state: or make business pay for the state: or share the cost equally. At present in the USA and UK, the people are suffering an unfair portion of the burden. For example, for every pound paid in Council Tax, between 25-40% goes to fund retired local authority pensions!

Personally, I feel that de Villepin et al, realise they have fiscal problems and like the vast majority of politicans, they simply Pick and Mix a few areas to tweak, since they have neither the whit nor guts to address the holistic problems: and thereafter generate an holistic solution!

In France, of course, the people enjoy the absolute right to demonstrate. In the UK of course, they don't. Remember the last abortive fuel protest?

Whatever the true (i.e. adjusted) stats are on youth unemployment, what is actually needed, as always, is close attention (and action) to ensure:

Schooling and post-school training makes people employable; (i.e. they have relevant skills);

The overall economic fabric creates an excellent environment for businesses to invest and create strong product lines and thus jobs;

Jobs and forward career prospects allow people to earn enough to improve their position.

Simply picking one bit is merely a proptypical political knee jerk reaction, born of depseration, normally![Www]

 

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The problem with Deby's statements is that they are not backed by

facts, but mostly by anecdotal data or so-called "Common Wisdom" or

"idées reçues" that often prove to be false when subjected to

fact-checking.

For example, the statement <i>It is possible to fire people too,

but believe me it is very difficult</i> is misleading. There is

one figure which should help to understand that it is possible

to fire employees in France: according to the the Public Employment

Services(ANPE), every year, around one million

people are fired in France, part of them (300,000 in 2004) for economic

reasons, and part of them (600,000 in 2004) for personal reasons. Of

course, the vast majority of them find a new job.

I am not trying to argue that France is some kind of perfect state

where everything is just 100% fine; what I'm trying to say is that by

most recognized economic and social indicators, France is doing about

as fine as, say, the UK, or even the US, a bit better in some areas, a

bit worse in others, but not so significantly as the media would like

you to believe.

The debate, if theree is one, is not about France per se, it's about

economic

policies favoring the corporate classes vs the labor, as in laborand

investments = costs which must be reduced in order to maximize

short-term profits which benefits sut a few.

France being the

country that expresses most forcefully a different view on economic

policy and capitalism -- and let us remember that despite that

different view, French multinational corporations are still amongst the

most profitable in the world -- there is a "shoot the messenger" aspect

in the media, i.e.

make France look back and policy prescriptions coming from France can

be safely demonised.

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the terms laid out look pretty good to me. So the probation period is 2 years, but they're still on full pay and they still have to be given 2 weeks notice before 6 months is up, and a months notice after 6 months

These 'harsh' terms are in fact better than the guaranteed minimum in UK. The 2 years probation applies to EVERYBODY here in the UK. Yet according to the Times yesterday there are 400,000 French living and working in UK of which 2/3rds are the younger ones.

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I'll give you another example that will disprove

the notion that labor is being coddled and privileged in France

(especially as it is more productive already).

According to a 2006 study on Competitive Alternatives conducted by the

international consulting firm KPMG (hardly a bastion of socialist

thinking)... I'm quoting now:

"For manufacturing operations, labor costs

typically represent 55 to 73% of total location-sensitive costs. For

non-manufacturing operations, this range is typically 76 to 87%.

"Labor-related costs vary significantly among countries:

"Singapore has the lowest salary and wage costs among the nine countries examined, followed by Italy, France and the United Kingdom.

"Costs for Statutory Plans as a % of payroll are lowest in Canada, followed by the US, the Netherlands and Singapore.

"Costs for other employer-sponsored benefits as a % of payroll are lowest in Japan, followed by France, Singapore and Canada.

"Combining these three elements, total labor costs are lowest in Singapore, followed by Canada, Italy and France."

The bottom line expressed a a % of cost advantage (if minus, disadvantage) relative to the US is as follows:

1. Singapore: 22.3%

2. Canada: 5.5%

3. France: 4.4%

4. Netherlands: 4.3%

5. Italy: 2.2%

6. UK: 1.9%

7. USA (baseline) - 0 -

8. Japan: -6.9%

9. Germany: -7.4%

Here is the methodology for the study:

Competitive Alternatives represents KPMG's guide for comparing

business costs in North America, Europe and Asia Pacific. The 2006

study is the most thorough comparison of international business

costs ever undertaken by KPMG, and contains valuable information

for any company seeking cost advantage in locating their international

business operations. The study is an expansion and update of previous KPMG publications,

and measures the combined impact of 27 significant business cost

components that are most likely to vary by location. The study covers

17 industry operations in 9 industrialized countries: Canada,

France, Germany, Italy, Japan, the Netherlands, Singapore, the United

Kingdom and the United States. The basis for comparison is the after-tax cost of startup and operations,

over 10 years.

Here is the link to KPMG:

http://www.choixconcurrentiels.com/download/default.asp

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May I suggest that those of you interested in European economics and

growth and comparisons about GDP follow the link below to an article

recently published in THE ECONOMIST, hardly a bastion of socialist

thinking :

link

http://economist.com/displaystory.cfm?story_id=5504103

France and Britain, when the statistical playing field is levelled, are

actually richer than the US, France being a bit ahead of the UK.

The FINANCIAL TIMES, also no suspect of leftist bias, explains why:

"it was not a rise of profits or other non-labour income that squeezed

the middle-ranking US citizen but an increase in the share of the top

10 per cent of wage and salary earners who have captured almost half

the total income gains in the past four decades. Within that, there has

been a vast increase of the share of the top 1 per cent, who gained

more than all of the bottom 50 per cent."

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MH - your knowledge of statistics is astounding or your knowledge of where to find them!  Yes, I read them and of course statistics do give very good indicators, but statistics can be massaged.

My experience and comments are about what is happening on the ground - inside France.  In the cities, I see people spending months (sometimes years) looking for a job that reflects their qualifications + knowledge and pays something which makes it more worthwhile that sitting at home and getting state benefits.  I see those who work, become exasperated by the deductions from their monthly salary.  I hear the employers stating they would love to take on more people but it does not make financial sense as it is too costly. 

Out of the cities it is much the same, people do have ideas/business ventures but it costs too much to set up. I see people working on the black because it makes more sense - get the benefits and top up the rest au noir.  I even see employers taking advantage of this too because it is cheaper. Everyone is moaning re the increasing national debt, the Fisc coming and asking for more, the ever increasing costs of health cover and the derision of their services because of it. I am not an economist just a realist.  Yes, the UK has its own problems (consumer debt), but France is holding on to its tried and tested formula -yes it has held them in good stead for now, but the world is changing.  I would love to have a good social state, but people are ruthless, competitive by nature and want a piece of the want Westerners have been taking for granted for 50 years.  Civilizations and economies change and an alarming rate, faster than they did previously.  The Greeks, Byzantines, Turks, Egyptians had the best for a period of time and look at what happened when they stood still.

Off to Sunday shopping now.........

Deby 

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[quote user="Gluestick"]

In macro-economic terms, one has three fundamental choices: make the people pay for the state: or make business pay for the state: or share the cost equally. At present in the USA and UK, the people are suffering an unfair portion of the burden. For example, for every pound paid in Council Tax, between 25-40% goes to fund retired local authority pensions!

[/quote]

A report released by PWC a few weeks ago showed that nearly 95% of the tax raised in the UK is now paid by businesses not individuals - a swing of nearly 8% over the last ten years.   Historically, the UK may have compared favourably with France but that difference is eroding.  You only have to look at the large companies like Amazon and Google who have recently chosen to locate their businesses in Eire rather than the UK - citing the onerous UK tax burden as a significant factor in their decision.  Without incentives for business and entrepreneurs (by rewarding those who create business, reducing red tape and bureaucracy, reducing the tax burden) there is no employment - and so the levels of employee tax become irrelevant.  Socialist ideals encourage the 'moyen' and stifle the talented.  Which is where France is and where the UK is sliding to.

Hastobe

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Deby: Yes, the world is indeed changing, and alas, not for the

best.  But the French brand of capitalism and societal model

appears to many much better positioned at having a shot at pulling

through the forthcoming crash that threaten the US (and by extension,

the UK) models.

(This is not necessarily a French viewpoint as many French are equally

gloomy about what they see as their own failings; it's more an

enlightened international point of view.)

The combination rising energy shortages/prices, the growing US trade

inbalance and is ballooning budget deficit ($2.9 billion a month spent

on Iraq with no end in sight), plus the burst of the real estate

bubble, are going to deal a very severe blow to the US economy within

the next 2 to 5 years.

Mark my words, many who are (wrongly) criticizing the French system right now will be singing its praises in 5 years.

PS: If you are interested in discussing economic trends, energy issues and the likes, may I recommend the EUROPEAN TRIBUNE

forum: http://www.eurotrib.com - it's in English, it's free, and it's

frequented by a large number American and European business folks (from

all over Europe) of reasonable political stripes (no raving extremists).

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I would very much like a reference source for the PwC study you mention, if possible, Hastobe.

I must admit that I am not a huge fan of PwC: after all, they serve the big corporations and rather like Fat Digby (CBI) have a narrow agenda.

The UK is vaunted by the present government (and their predecessors) as one of the cheapest places to locate. Large businesses are in the main Tax Neutral concerning VAT. On Cost to employment is only 10% (ish average) of gross salary/wages (NIC), excepting the higher earners (above nearly £600/week).

Peripheral benefits are rapidly vanishing: Final Salary pensions, e.g., excepting for higher earners.

Circa 49% of UK GDP is created by SMEs (Small to medium Sized Enterprises) as is nearly 48% of total private sector employment.

In any case, larger companies are able to employ quite esoteric tax avoidance mechanisms, not accessable by the majority. All mainstream expenses (including Employer's NIC) are offset against Corporation Tax, which has reduced considerably in the past few years.

The largest single tax revenues in the UK come from Excise Duty and VAT, particularly on fuel. WHich cost is paid from taxed income (by the individual) and is offset, where Vatable, against Corporation Tax by business.

Having had a bit to do with Ireland and capital investment, one of the main reasons Ireland has been so successful in attracting inwards investment has been first the IDA (Industrial Investment Authority) and the tax-friendly system: particularly for exporting manufacturers. That's why so many multinationals relocated or located there.

Finally, I would say that the UK (like the USA) has encouraged a highly exploitive business ethic in the past few years: France seems to resist this, on the sensible avoidance of short term gain for long term pain: precisely why Chirac is robustly resisting EU endeavour for France to open up its energy markets. Presumably Chirac does not want an Enron or a Centrica (British Gas) stiffing both business and the public with 24.5% rises, after 12% and 15% rises shortly before![:@]

 

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I'm with Deby.

You can quote statistics all you want, that France is second only to Singapore in this or that, but from down here on the ground in France, it just doesn't wash.  There's no general sense of optimism or ambition, because every way people turn they're blocked.

You can say that "France" is rich, but its people aren't. 

You can say that unemployment is in fact "only" 7.6% or whatever, but that's not what French people believe.  They believe that it is very high, in some places up to 25%.

Et voilà, quoi.  As they say in France. [;-)]

 

 

 

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Hello MH,

You have a very interesting viewpoint and I hear where you are coming from, whilst US & UK economies appear to have it all - I do question, do they? And for how long? There are many emerging economies who have different goals, beliefs and values I am thinking of China, India, Indonesia and so forth.  I do struggle with the French model as it is not efficient, it could be so much better.  There are so many other things that made France great once, its geographical location, geography, infrastructure, arts, style, education (that sticks in my throat a bit that one) even the bourgeoisee had a place in time, but now it is imploding.  Their brains  are leaving, other infrastructures are getting better, arts and style are more global and of course the country ain't moved.  The world has moved.  It is still a beautiful country and for some it is still a fantastic place to live, but I think it depends where you are in life, excellent for the 50+s who have nice pensions, bloody hard for everyone else! Do not get me wrong, it is not easy anywhere and the UK has its own pressures, but at least there are opportunities if you want them.

Thanks for the link by the way, I will have a peek.

ps. anyone how know I add those smilies I select one and they dont seem to work, if I drag them, I just get the code.

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Deby, go to the list, insert smiley, and click on them on there, it only seems to work like  that.

 

What a thread this is. I see France as Deby and Saligo do and as everyone french I know does too.

 

Those jobs for life, well, those with functionnaire type posts have this. These jobs seem to be many and varied. Private companies ofcourse are different, but everyone knows that anyway.

 

MH, if you are right, then I can only see the world having regressed if the french model will be worthy of praise at some point in the not too distant future.

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One can always tell, that whenever a thread is started about the merits or otherwise of France, where the negative posts are going to coming from. This thread hasn't failed to follow that pattern.

I'm with Gluestick & the "Most Holy" on this one . Leaving aside statistics, trends and suchlike, the UK doesn't have a good feel about it nowadays, and i've yet to meet anyone recently, who would contradict that.

 

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[quote user="Gluestick"]

I would very much like a reference source for the PwC study you mention, if possible, Hastobe.

[/quote]

Unfortunately the report the statistic came from was from a post budget seminar I attended and in print rather than from the web.  I have found a couple of references to what I was saying from other sources (PWC Portal and the web site of one of the main accounting bodies).  Which I have added below.

Dealing with some of the points you have mentioned.  Corporation tax is only part of the tax burden faced by companies, there are also business rates, employers NI (at 12.8% uncapped), irrecoverable VAT, SDLT, Insurance tax, petroleum levies etc etc.  Unlike a few years ago there is less and less opportunity for the anti avoidance that some peope believe is rife.  All schemes now have to be registered and are often blocked retrospectively.  HMRC now take the approach that they decide what tax they want rather than what is due and employ intimidatory tactics to get a settlement - Inspectors are now heavily target driven and prefer to 'horse trade'.  I would estimate that our group (assets of £20bn) has a 'real' tax rate that is approaching 60%. (We make predominantly exempt supplies so have a high level of irrecoverable VAT)

[quote user="Gluestick"]

Having had a bit to do with Ireland and capital investment, one of the main reasons Ireland has been so successful in attracting inwards investment has been first the IDA (Industrial Investment Authority) and the tax-friendly system: particularly for exporting manufacturers. That's why so many multinationals relocated or located there.

[/quote]

Ditto - I agree with your regarding Eire.  I have also been involved in advising companies relocating to Eire and the primary attraction has been the significantly lower rates of tax (e.g. the IFSC).  However, it is now also the skills of the workforce - undoubtedly improved by the number of new employers.  The outcome for Eire has been huge boost to its economy, high employment and a significant improvement in the standard of living.  Unlike the French, I can't recall seeing too many Irish protesting abut the policies of their government - perhaps this says something?

The information I did locate on the change in the UK tax base...:

A PwC study of 70 companies, including 36 FTSE 100 companies and a large number of in-bound businesses looked at a variety of different taxes and asked for comment from respondents. Examples of the taxes paid by business are (figures from Pre Budget Report 2004):

  • corporation tax £34.8bn;

  • business rates £19.1bn;

  • national insurance contributions £77.7bn (half or more are employer's contributions, the majority of the remainder are administered by business); and

  • petroleum revenue tax £1bn

There has been plenty of comment around the UK's headline rate of corporation tax in comparison with other countries, particularly newer EU Member States. In fact, corporation tax represents only about 7% of UK Government receipts and companies pay many other business taxes. Indeed, according to the survey 57% of companies estimate that their total tax rate exceeds 40% and 30% estimated that it was in excess of 50% – a huge increase on the 30% headline rate of corporation tax rate widely discussed in public.

The problem stems from the lack of visibility around the main business taxes paid. Only corporation tax is disclosed in the financial statements and just 6% of large companies stated that they currently include information on other business taxes in their corporate responsibility reporting.

(This is looking at company tax contributions rather than business tax contributions - hence the apparent disparity in the % contribution figures from those I posted previously)

The other article:

FD group tells taxman to back off

UK plc's top FD Jon Symonds calls for the business tax debate to shift away from avoidance

The debate on tax should be shifted away from avoidance and onto issues of global competitiveness, the chairman of the Hundred Group of Finance Directors has said.

At the launch of the Oxford University Business Tax Research Centre last week, Jon Symonds told a meeting of tax professionals that there had recently been ‘too much discussion about anti-avoidance’ and that the new centre provided a ‘wonderful opportunity to shift the debate’.

The rare comments on tax matters, in perhaps Symonds’ last public appearance in his capacity as chairman of the influential Hundred Group of Finance Directors, will be seen as an attempt to force the attention away from what businesses do and onto tax policy.

Symonds...echoed the views of advisers who suggest that anti-avoidance initiatives and higher taxes are encouraging businesses to set up elsewhere, reducing the tax base as a whole.

Referring to research by the Hundred Group conducted with PwC, Symonds said that far from just paying corporation tax, businesses paid 18 different taxes.

The research should produce an idea of a ‘total tax contribution framework’, a new accounting model that reflects the range of contributions businesses make to government.

Symonds said that UKbusinesses wanted to contribute ‘greater absolute taxes as profits, but smaller relative taxes’. Businesses have ‘real concerns about the deterioration of competitiveness in the UK’, he said.

The details on the % shift in the tax burden from individuals to businesses was again from PWC - in their summary of the impact of Gordon Brown's ten budgets and the tax changes he has introduced.

Hastobe

Btw - I'm not trying to say that France is better than the UK - personally I think France is not a good place to be if you are young, bright and want a career - it is increasingly a place for the retired and already well heeled.  Neither myself nor my husband would choose (or could afford) to leave the UK to live and work in France and we have had friends who have returned to the UK for the same reason. As a place to retire to - now that is different.  It is the fact that France has clung with fingernails to its old way of life that gives it its 'old fashioned' appeal.  Having said all that I believe that the UK is not the bastion of economic success - despite what Tony and cronies say, and is on a slippery downhill slide.  Within the EU today I think Eire have the best model...


 

 

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"A word of advice - don't even try discussing your angle on it with French people.  The merest whiff of making life easier for employers will have you branded as a liberal, capitalist, Thatcherite Anglo-Saxon, and this is not a Good Thing!"

 

S.B. Well I had an interesting conversation on this subject with our tiler in France the other week and he was of the opinion that the French are too molly-coddled by the state and he would like to see a change so maybe they (the French) are not all cast in the same dye!

I have to say that I agree with TU SB and Deby on this one.

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I wonder how much influence the huge changes in agriculture have on the

employment situation in France , especially that of young people. ie a

rapid drop in the number of small family run farms, increase in large

units, and young people no longer wanting to follow their parents as

agriculteurs.  This site has some interesting statistics both on

agricultural changes and unemployment figures:  http://www.insee.fr    A good example is in our commune

which 20 years ago had about 10 units, and now is down to 2.  Pat.

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[quote user="bedders"]

One can always tell, that whenever a thread is started about the merits or otherwise of France, where the negative posts are going to coming from. [/quote]

I don't see anyone being negative.  The point is that if you listen to French people talking about France (rather than turning every conversation back to the woes of Britain, because they're not really that interested) it's not a wonderland of employment opportunities or anything else.   This forum (not run by French people) is the only place I've seen anyone trying to say that France doesn't have an unemployment problem.

Funny really.  [;-)]

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