Looking to the north for a remedy

france.gif As growth in France remains to be sluggish coupled with a structural uemployment rate of near 10% it is time for a solution to bring the big country at the heart of Europe back on track also in the long term -  reforms are needed. The big question is: What kind of reforms?

In their effort to reboost their economy French politicians and analysts have on several occasions invoked the Scandinavian economic model of flexible labour markets and a high service (flexicurity) as the possible cure for the French economy. But what is the Scandinavian model and can it help France at all?

Once again the Neweconomist and Edward Hugh from AFOE serve as my point of reference; see this post by Neweconomist.  The real treat however is this post by Neweconomist where the Nordic model is well summarized as well as this EPC working paper brought to us by Edward Hugh. As a Danish business with a French bug I am sure you will understand me.

The original source of the discussion is this article from Le Monde talking about whether France can imitate the Swedish  economic model. The article describes the Nordic model very postively ...

"Le modèle scandinave est le seul à la fois juste et efficace en Europe, selon l'économiste André Sapir (notre chronique du 23-24 octobre). Le modèle anglo-saxon est efficace, mais inéquitable, le modèle franco-allemand est équitable, mais inefficace (trop cher), et le modèle latin est à la fois inefficace et inéquitable. Le choix est donc de glisser soit vers l'anglo-saxon, soit vers le nordique."

However, the article also describes how the Nordic model is not easily imitable because of the Scadinavian countries' distinguishness.   

"Copier la Suède, est-ce possible ? Deux objections sont formulées. La première tient à la petite taille de ce pays de 9 millions d'habitants, comme des pays scandinaves en général. L'esprit de la "maison commune" est très ancré. Surtout, 80 % des salariés sont syndiqués auprès de l'unique centrale, LO, qui est habitée par une volonté de consensus. Rappelons qu'en France, les syndicats, divisés par une permanente course à la surenchère, ne représentent que 8 % des salariés.

L'autre objection est celle de l'état d'esprit. Domine en Scandinavie un puissant "esprit civique" qui rend le modèle intransposable dans un pays comme la France, selon l'économiste Pierre Cahuc."

Is the Scandinavian model the solution for France then ... ? 

The answer could be both yes and no. The idea of importing the economic ideas of another country implies an easy solution to a very complex issue and I for one don't believe that. Having said that, there are some things France could learn from the Scandinavian countries but those issues have as much to do with French distinguishness as it has to do with the virtues of the Nordic model. 

One example is the labour market where zealous French unions are still affirming the right to only work 35 hours a week - this does not create jobs! See my post on Hewlett Packard in France for a mirror of this. Another example is the almost institutional anti-capitalist sentiment in the French society which I have reported on several times - See posts here and here.

France cannot rely on some Nordic model to come to the rescue bringing prosperity and wealth. And even if cherry picking the economic virtues of the Scandinavian countries would indeed be a solution, France has some issues to deal with which  cannot be remedied by the cross-national transfer of economic ideas.