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At the end of August, French President Emmanuel Macron unveiled the labor-market overhaul that will make or break his presidency – and may well determine the future of the eurozone.Labor reform has long been on France's agenda. Macron's reforms aim at increasing what is euphemistically called labor-market flexibility.The logic behind Macron's labor-market reforms has driven the structural-reform agenda of policy economists and international institutions ranging from the International Monetary Fund to the OECD during the last three decades. Greater flexibility, according to this view, will enable French firms to adjust more efficiently to changing market conditions, which in turn will make them more competitive and dynamic, giving the French economy a boost.Firing costs are hiring costs, as economists like to say. Reduce firing costs, and you reduce hiring costs, too.Many of the economies with which it competes have similarly strong labor-market protections. In fact, according to the OECD's indicators of employment protection, German and Dutch workers under permanent contracts enjoy even greater security than French workers do. So, whether Macron likes it or not, his presidency is likely to be judged by the economic and political repercussions of his labor reforms.
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