Closing the Entrepreneurial Gap: Liberalizing Employment Law to Restore French Competitiveness

Kelly Hamren | January 1, 2014

Malaise in the European economy, and particularly in France, is both a result of dampened entrepreneurial activity and a continuing drag on economic competitiveness. In France, rather than undertaking much needed structural reform, the government has relied heavily on tax increases and heightened public spending to stimulate growth. This Note contends that French reforms should instead focus on liberalizing French employment law to encourage entrepreneurial activity. Because entrepreneurship requires innovation and creates new economic opportunities, it is increasingly viewed as one of the most important means of resuscitating depressed economies. By its very nature, entrepreneurship capitalizes on the formation of new ideas and the development of innovative products and services. Statistically, France has lower levels of entrepreneurial activity than the United States, China, Brazil, and many other European countries. France’s government institutions and legal framework play a critical role in contributing to its low levels of start-up activity. Rigid hiring and firing laws favor employees and do not lend themselves to the type of quickly changing and shifting workforces needed by start-up businesses. The costs and legal implications of hiring, firing, and expanding create risks that often seem to outweigh the rewards for French entrepreneurs. This Note provides an in-depth overview of the specific policies and practices in French employment law that restrict growth in France’s entrepreneurial sector. It concludes with a prescriptive analysis for restructuring the French legal system to help encourage entrepreneurship and stimulate job creation in the face of declining French competitiveness.