The jobs crisis hits home ― literally

Rio de Janeiro police about to enter a favela?
No, their Parisian counterparts entering  my
apartment building to confront a hostage taker

PARIS
For someone whose main activity deals with workforce management, the surreal situation I found myself in this week couldn't have brought any closer the  main HR issue facing Europe and the United States: high and increasing unemployment figures.

Last Tuesday, close to 12 noon. I was in my home office, expecting a courier bringing me documents from a client when the phone rang.

"Sir," the courier's voice sounded stressed out, " I can't get to your apartment building, it's been cordoned off by the police."

"What? Why?" I asked, wondering if he got the address wrong.

"They say that some people have been taken hostages in the Pôle emploi office."

The Pôle emploi is the French government agency dealing with (un)employment and the local jobs center is indeed housed in my apartment building, a mainly residential complex that occupies a large block north of the Bastille area (see map below.) I had been working from my home office the whole morning and just like a cheated husband is the last one to find out about his situation, I had no idea something was amiss in my building.  I put a jacket on and went downstairs.

At the main gate I saw several cops who asked me the way to the concierge. I explained they needed a special key to get there but I, as a resident had one, so I'd let them through. "But the concierge is not available now, it's her break from noon to 2:00 pm. What is that you want?" They explained that there was one man, clearly a desperate jobless fellow, keeping some people hostages (the things one would do to get a job) and they were wondering if there wasn't another way to get to the Pôle Emploi offices (they had amassed their forces at the main entrance, on Rue Pelée.

The quiet and peace of Rue Pelée, just a stone's throw
away from the Bastille, shattered as an armed unemployed
man takes hostages in the jobs center office located
in my apartment building

"Oh yes, " I replied. "There is an entrance from Rue Amelot, but they don't use it anymore, so you guys can force your way through there." And the good law-abiding citizen I am took them there (# 2 on the map) and then retraced my steps back to the main gate on Rue Pelée (# A on the map). As soon as I came out I felt as if I I had stepped onto a movie set. The street swarmed with cops, elite forces clad like Robocop, it was closed all the way to the Boulevard Richard Lenoir and one of the cops said, "Sir, if  you leave the area you won't be able to come back." I called the courier who was stuck beyond the police lines. Since I needed the documents urgently to prepare for a client meeting, I took the chance. Once I got the delivery from the courier I stood mesmerized by the BFM reporter describing what was happening within my building. There were other reporters and press photographers. (# 3, on the map)

"You know," I said to the BFM TV reporter Rachid Mbarki, "there's another way closer to the building, and the cops haven't closed it, why don't you go there?" I was stunned to hear the reply: he was happy to cover the news from a safe distance. Some other reporters, including one from AFP (Agence France Presse) though, overheard me and asked me to lead them. So I did my second good deed of the day, this time in favor of the free (if not courageous) press, and walked with them down boulevard Richar Lenoir towards Bastille and then right on Allée Verte which runs parallel to Rue Pelée. Right in front of my building there is a passage which allows the two streets to communicate and, although a policeman was stationed there not allowing access to Rue Pelée, at least you had a nice vantage point of the entrance to Pôle emploi to see all the action from up close. (# 4 on the map) At the same time the other BFM TV guy was at least several hundred yards away.

Since I couldn't enter my building from the Rue Pelée entrance, I decided to check whether the one on Rue Amelot, which runs along the Boulevard Beaumarchais was free. So I turned into Rue Amelot, walked up and miracle of miracles, no cops, the entrance (# 2 on the map) was wide open, even more surprising since it leads straight to one of the Pôle emploi side entrances where I found the cops I had led to still there. They looked scary in their Robocop attire ready to barge in should the phone negotiations with the hostage taker fail, or things go nasty. I passed them and entered my building from the inside thus allowing me to go back to my apartment.

I switched the TV on and it felt so surreal to see my street and building making the headlines. The hostage taker was an unemployed fellow who said he was desperate and was ready to use his gun if attacked. It felt like being in a movie, except that the movie was real and taking place right where I live. Well, I didn't have much time to muse further since I had to leave for a meeting at 2 pm. So I left from where I entered, the Rue Amelot entrance, once more passing Robocop & Co., but this time the police had finally realized there was a weak link and had stationed two officers at the entrance who gave me the same warning I was given two hours ago at the Rue Pelée entrance: "If you leave you won't be able to come back." When asked how much longer this circus was going to last, one of them shook his head seriously and said, "We've had situations where it lasted two days." Two days without entering my building! They must be joking. Well, I managed to fool them once, I'm sure I'll manage a second time, I thought.

When I returned after 3:00 pm, the standoff was still on. The whole two-block area was cordoned off , all the way to where the boulevards Richard Lenoir and Voltaire meet (top right angle on the map.) I had only one thing on my mind - how to get back into my apartment? Suddenly a stroke of genius hit me. The underground parking garage. Since the gate is locked and only opens when cars come in or out, maybe there won't be any cops there. I walked to Rue Amelot, and saw that the street had inexplicably not been closed, and apart from the two cops I saw on my out, there was nobody in front of the parking entrance (# 1 on the map.) A few minutes later, a car came out and before the gates closed I slipped in. From inside the bowels of the building I went to the basement area and from there one of the elevators took me to my apartment. I felt particularly proud of myself to have fooled the police security system twice in as many hours.

The drama stage. The double red lines indicate access closed by
police. Strangely enough, they closed all the way up where
Bd Richard Lenoir meets Rue St-Sébastien, but not much closer,
the Rue Amelot, from where I managed to enter and leave
unimpeded more than once 

An hour later, the hostage taker surrendered. It turned out his weapon was a toy, "without even bullets" as my neighbor said. He just wanted to draw the attention of the nation on the plight of the unemployed, he claimed as he was being led away.

What to make of all of this? Three comments:

1. The economic crisis which is leading to such acts of desperation is not letting up as governments are unable to fix the debt crisis (see my post on it last March) and try to resort to misguided so-called labor reform policies (see another post on this topic from July 2010- nothing has changed since then.) Expect to see more of this kind of behavior, but please do it somewhere else, not in my building, or at least not when I'm in residence.

2. The police action showed a lot of incompetence (my fooling their security scheme twice is ample proof of that) and overkill. 150 men armed as if they were about to land on Tripoli for just one crazy fellow? Come on! And, just look at the map above: what sense is there in blocking traffic (and people access to their homes) two blocks away when at the same time Rue Amelot which has a direct entrance to Pôle Emploi is left completely free? Illogical!

3. The press didn't fare any better with that reporter from BFM TV insisting on remaining as far from the action as possible. Watch a video of him "reporting" from a safe distance. Now I understand the meaning of "armchair journalism".

4. For someone who spends part of the year in violence-ridden Rio de Janeiro, which I have known for eight years now, the whole affair was quite ironic:  I never experienced in the Marvelous City anything remotely  comparable to what I saw in the City of Light this week. Sometimes true violence happens where you least expect it.

The case for a different labor-market reform - not PELMAR

BARCELONA,
Read the mainstream economic press (by which I mean The Economist, the Financial Times, the Wall Street Journal et al.), listen to pundits from the establishment's think tanks and international organizations (OECD, IMF etc.) and you always hear the same litany again and again: to grow your economy and create more jobs you must reform your labor market. And the reform they have in mind is always the kind that curtails employee rights and benefits, never employers' - let's call it for what it is: pro-employer labor-market reform (PELMAR). With the current economic crisis, which has thrown millions of workers out of their jobs in the developed world, it is time to stop and ponder. Is this medecine the adequate one? Does it guarantee any success? Has it been responsible for increased worker participation in the labor market in the past? How does it dovetail with our Western notions of social progress?

So desperate are the current times that here in Spain (20% unemployment rate), a Socialist government has decided to abandon one of its tenets of employee protection (something not even its conservative predecessor dared consider) and reform its labor market in the sense demanded by the conventional wisdom: relaxing rules on firing employees in the hope that it would encourage companies to hire more easily. The logic is impeccable: if I can fire 'em when I want, why not hire 'em when I want? Before you jump to the conclusion that there is no other solution, it's good to look at the past. When I lived in Spain 15 years ago, unemployment was even higher than now (23%) and yet neither the Socialist administration of Felipe Gonzalez nor its conservative successor under José Maria Aznar embarked on PELMAR, even though European Commission, IMF and World Bank reports all encouraged them strongly to go through the same tired old song of making life even more miserable for employees (but brighter for the bosses) in the hope that more jobs would be created. Well, the next decade and a half saw Spain growing tremendously and the unemployment rate go down from 23% to 8%, even better than France. And this without any PELMAR, with employee rights maintained as intact as before. Now, you might say, OK, Spain is a one-off case, the exception that proves the rule, coincidence is not correlation or causality, they were just lucky.

Well, let's cross the Atlantic and check out Brazil, a country I know well since I spend several months a year there. Brazil's labor rules and regulations are even more stringent than Spain's: many employers consider it a nightmare since, once hired, an employee is almost unfirable (or, to be more accurate, it is costly to do so), and if you do and are taken to court in 90% of cases the labor tribunal will rule against you. And yet, Brazil's unemployment rate has been coming down steadily for the past decade. Yes, just like Spain, and without any need for PELMAR. 

You want a third case? Well, let's take our pilgrim stick and travel up north, to the world's most powerful and wealthiest country: the US of A, the cradle of PELMAR before PELMAR even existed, corporate paradise and worker hell. Living in the States in the early '90s I was somewhat shocked to see that in the Land of the Free and Home of the Brave people could be fired instantly with or without a cause, that many had no health insurance and had to toil double shifts at two jobs just to make ends meet. Sure, employees could go to court in case of wrongful termination but astronomical legal fees make this option all but an impossibility for most workers. Of course, you could (I dare not say "can" anymore) get a job not too long after having lost the previous one, but even this cannot hide the pain involved with stressfully looking for a job over the weekend because you were let go on Friday and needed something on Monday. Not to mention that any new job also means a period of uncertainty, adaptation and learning the ropes, making new friends among new colleagues. But at least the US unemployment rate was half that of Europe, so, you might have said, it evens out. Well, not any longer - if ever. With both the US and Europe facing the same economic crisis, the US unemployment rate has crept up to the same levels as in my native France, home of the 35-hour workweek, 8-week paid vacation, universal health care. Who is now better off? The US worker or the French one?

Still a skeptic? Let's look at the UK, right across from France, and yet in labor matters so close to the US. (Only when Tony Blair came to power was a minimum wage finally adopted.) The British unemployment rate is more or less at the same level as France. But, I'll be generous, I'll consider this current figure a statistical outlier and use the figure of better times, say 5% against France's 10% (higher than the current one, but I said I wanted to be generous to my detractors.) Since both have similar labor sizes (let's say 30 million) let's make a comparison. If France were to implement US/UK-type PELMAR (free firing, no minimum wage, little paid vacation, limited unemployment benefits, curtailed employer-paid health care plan, well, the works) it would see its unemployment reach the UK/US ideal level of a jobless rate of 5%. In other words, in the old system 3   millions French employees (10% of the working population) were miserable (because unemployed) but 90% that is 27 million were happy (because employed and protected). In the new, PELMAR-inspired scheme, only 1.5 million (5%) would miserable, but the 95%  (that is 28.5 million) would now be worse off because, sure they still had jobs, but could be fired at a whim, had fewer vacation days, limited benefits etc. What logic is that that in order to make 1.5 million people better off (and there is little doubt that a job, no matter how badly paid, is better than no job at all) we make 28.5 million worse off? The logic that says, "who cares about employees, as long as somebody else  is going to be better off": the employing companies - and the shareholders who hide behind. (Have you noticed how you always hear calls for labor-market reforms, but never for management reform? Although the financial crisis and the ensuing recession, along with the destructions of companies such as Enron, WorldCom etc. were all because of incompetent, dishonest and irresponsible management, governments, who are in hock to, when not in cahoots with, business, will resist every effort to reform management - we are seeing it now with attempts to water down the restructuring of banking management.)

Are we to go back to Dickens' England and child labor and 20-hour workdays? Have we decided against the idea of progress? If yes, then we have decreed the end of democracy, because a democracy is a system where governments arbitrate among competing interest groups in society. Once you decide that the majority must suffer so that a few can thrive, we are straight back to an ancien régime system.    

The examples I have shown from varied countries show that what drives the unemployment rate up or down is the state of the economy, not labor regulations, so there is no justification to engage in PELMAR. I can see some of you smirk and point to other culprits. One would be the state of public finances: "we are broke, can't afford it." Well, have you considered shifting budget resources from unproductive areas such as defense to more productive ones such as education? The G8 and G20 and GXX leaders love to meet on a regular basis in exotic locations and issue platitudes in their final communiqués. Why not for once do something useful and agree that all will reduce their military arsenals by half, thus liberating resources that could be put to better use for PEOPLE. We could thus finally cash the "peace dividends" that have eluded us since the end of the Cold War.

Other skeptics will then point to another culprit by saying, "Can't do anything about it anyway, it's globalization. If your costs are too high, jobs will flow to India and China." Well, not so fast. The globe-trotter and international person I am is the last one to rant against a globalized world. I am for a win-win globalized system where everybody wins, but not for one where the same old types increase their profits and the others are all worse off. I am also instinctively against government expanding its reach with too much regulation (I've always believed that a good government is a small government, if not no government.) But, if anything, the current financial crisis has shown that too little government regulation can create a worse situation.  (There is also a case to strengthen and enforce government rules against bullying in the workplace, the plague of modern business, which is inflicting untold daily misery on millions of employees all over the world.)

Let's not forget that the aim of public policy and economic growth is to enhance PEOPLE's lives. If economic growth is going to come at the expense of PEOPLE then it's time to question this economic growth. So, Yes to a global system where we all trade freely, where good and services and people can move freely, but where basic PEOPLE's rights are protected. And  No to a globalized PELMAR system  that throws us back to the Middle Ages. What next? Rediscovering the beauty of slavery, the ultimate labor-market reform?