What France can learn from Italy about labor market reforms

kfz-italy-franceIn an opinion piece published in the Wall Street Journal, IZA Director Klaus F. Zimmermann analyzes European policymakers’ latest efforts at implementing difficult but necessary labor market reforms. Zimmermann sees remarkable progress in Italy, but lack of action in France. These are the key points he makes:

  • The coming battles over Europe’s troubled economy will be won not in Athens — but mainly in Paris and Rome.
  • The real surprise now is that it is Italy, not France, that has taken serious steps on enacting key measures on labor market reform.

  • While it is now more enticing to hire in Italy than it has been in years, things in France are progressing much more tentatively.
  • The Italian government has shown the way by creating the legislative framework for overcoming the two-tier labor market, while the French government is still dabbling with reforms that are only slightly more than symbolic.
  • Paris still shies away from other essential steps, such as making its rigid work-week regime more flexible by reforming the 35-hour work week and addressing overly rigid employment protection. These measures would bring the goal of economic growth and lower unemployment closer.

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