A French lesson for Australia

In a strange way, many of the problems confronting France are incredibly similar to those facing Australia.

Far-right candidate for the presidential election Marine Le Pen speaks during a campaign meeting in Paris. (AP Photo/Kamil Zihnioglu, file)

Now for a different twist on the French Presidential election.

In a strange way, many of the problems facing France are incredibly similar to those facing Australia. On the economic front (aside from refugees and terror) in the looming Presidential run off, France is being given two very different solutions to its version of the problems. Down the track we will face similar choices, so let’s compare our two nations.

Both of us find that our employment creating industries suffer from a high currency. France has 10 per cent unemployment. We are at 6 per cent, mainly thanks to our building industry and housing boom. If this sector falters, we will find ourselves in an unemployment situation that’s not much different from France.

The French currency is high because it uses the euro rather than the franc, and the euro is boosted by the inclusion of Germany.

Our currency is high because of our iron ore and LNG exports, which are commodities produced by industries that are not big labour employers and, in the case of LNG, it is damaging the economics of our energy-reliant labour-employing industries.

Both of us have labour laws that restrict employment and are not consistent with the currency. The French situation is far worse than Australia but, as so often happens in France, the French have found ways to mitigate the problem.

They try to restrict the size of their businesses to less than 50 people (and sometimes even lower) to avoid the worst of the labour laws and that creates entrepreneurialism.

Here in Australia we mitigated the shift allowance and penalty rate part of our labour problem by large corporate deals with the unions which covered a huge portion of the workforce, and another big slab was covered by the use of the cash economy.

Although our official penalty rates were high, in reality relatively few paid them. Fair Work Australia tried to bring the official penalty rates closer to what people were actually being paid but were ambushed by Opposition leader Bill Shorten and the Prime Minister did not know how to bring the debate back to reality.

As a result, a large number of large and small enterprises, particularly large retailers and small cafes, may end up increasing their weekend/public holiday shift allowances to the official rate which will make the problem a great deal worse. We are heading in the French direction.

Both our countries have a serious Muslim terror problem although the French one much is worse than ours.

Both countries have horrific debt, although ours comes via the banking system rather than the government.

Both countries are becoming sick of the existing political parties that have not been able to grasp the state and national problems.

The French have a presidential system which has enabled them to easily dump both traditional parties in the latest election in favour of people outside the traditional political arena — exactly what the Americans have done when confronted with their version of the same problem.

If the next French president is Emmanuel Macron, then he is promising to reduce unemployment from ten to seven per cent by changing the labour laws. He will slash the public service to reduce the deficit. I wish him luck. The unions in France are ferocious.

The other candidate Marine Le Pen is planning to take the French out of the euro, which means the labour problem will be solved via the currency. If Macron wins and he fails to change the labour laws and/or his measures do not reduce unemployment, then there will be no alternative for France but to leave the euro and adopt a version of the Marine Le Pen solution.

The French are being given a real choice as to which solution they pick.

In Australia, an effective leader has not yet emerged from the left or right in the conventional parties. If a leader willing to tackle the issues does not emerge from one of the conventional parties, then voters may well go elsewhere as France has done.