For the past two months, France has been rocked by huge protests against a minor labour reform law turned cause célèbre.  This week, between one and three million people protested across France, seriously disrupting commerce, trains, airports, subways and traffic.

The law, proposed by Prime Minister Dominique de Villepin, was designed to allow French employers flexibility to hire youth under 27 for up to two years without contracts, and fire them without giving a reason. This sensible, if brusque, easy-hire, easy-fire act was aimed at reducing France’s chronic 8-10 per cent employment, which rises to at least 30 per cent among youth.

CPE, like last year’s disastrous referendum on the European Constitution, quickly became a lightening rod for every sort of festering popular fears and discontent, as well as a handy way of expressing widespread public anger and disgust over France’s inbred, elitist, self-serving political class.

Over 60 per cent of the French oppose the modest reform. It has become a rallying point for the Left, which desperately needed a new weapon against the Centre-Right government of President Jacques Chirac and his patrician prime minister, de Villepin. France’s very future lies at the heart of this issue. The French enjoy the world’s finest lifestyle in a rich, magnificent, well-run nation with an enviable educational system that produces highly literate graduates. 

Past socialist governments have given French a 35 hour work week, generous pensions beginning at 58 or 60, no-cost medical care from France’s excellent and efficient health system, and five week annual paid vacation. Firing workers in France is almost impossible. Welfare payments are ample.

Yet by some miracle, the French labor productivity is actually higher than in the work-till-you-drop USA, a fact that infuriates the Americans who scorn the France’s economic system and dislike the French because of their frequent ‘insubordination’ to Washington’s demands.

But France’s dolce vita cannot continue in the globalised economy. Rich as France is, she cannot much longer sustain high unemployment and the underclass of disenfranchised youth of immigrant origin who rioted in many cities last year. Government spending consumes 55 per cent of the over-taxed, over-regulated economy.

In many ways, France shares the same problem now faced in the US by General Motors. During years of plenty, unions extracted high wages and rich benefits from GM. Foreign competition took away a large slice of GM’s business, and all the gravy, leaving it with unsustainable overhead for non-productive spending on pensions and health. France similarly faces growing competition from Asia and Eastern Europe.

GM, and the French government, have to find some way to cut overheads and slash benefits. But who can blame the French for resisting dismantling of their luxurious welfare state. It’s like asking a Frenchman at his delicious lunch to leave the table and go do sit-ups. All those French students who have wasted years studying leftist claptrap like sociology and cultural anthropology now face the prospect there may not be enough do-nothing government jobs for them when they graduate.

The pampered students and unions are not mounting a second French Revolution, but a reactionary counter-revolution aimed at protecting their lavish benefits and lifestyle by claiming CPE will Americanise France and subject it to brutal, Darwinian ‘Precarité.’  While the Left rants and raves, the Chirac government is in comical disarray and almost totally discredited. After de Villepin sternly refused any compromise over CPE, Chirac publicly humiliating his prime minister by offering on TV to water it down. Meanwhile, Interior Minister Nicholas Sarkozy, who reeks of raw ambition, was furiously stabbing de Villepin in the back, calling CPE dead and offering ‘dialogue’ with protesters. Both are bitter rivals to succeed Chirac, whom ‘Le Monde’ rightly observed, ‘faces a calamitous fin de regime.’

Public opinion polls showed de Villepin at an all-time low, and Sarkozy’s popularity soaring.  While government leaders engage in a mini civil war, France is reeling.  The Left offers no new ideas, just more government spending and higher deficits — now an alarming 66 per cent of GDP. The Right is discredited.  France is in deep crisis. But do not give up on the French. They are at their best in crises. Recall the famous words of Marshall Foch in 1914 as the Germans were closing in on Paris: "My left is turned, my centre weakens, my right is crumbling. Excellent news! I attack!"

Eric S Margolis is the contributing foreign editor of The Toronto Sun. He is currently on a visit to France. He can be reached at margolis@foreigncorrespondents.com