French TV recently aired an interview with a managing director deploring the fact that he could not hire any new employees because to do so would push the size of his workforce past 50. Thatís the arbitrary size at which companies in France are hit by dozens of additional regulations, including requirements to set up a consultative workers council, a health and safety committee and annual pay bargaining.
Of course, the real effect of these regulations is to discourage expansion. That's why there are more than twice as many French companies with exactly 49 employees than there are with 50 or more - a prime example of measures intended to protect the workforce backfiring on the very people they are intended to assist.
Stating that labour laws in France are restrictive seems a gross understatement. The French Employment Code has grown from 600 articles in 1973 to 3,800 in 2003 and to more than 10,000 today. As a result, labour law has become a minefield. Recruiting new staff or changing even the slightest aspect of working conditions can be a dangerous game if you fail to master the most recent evolutions of the Code.
Putting aside the arguments about the effect of this regulation on the French economy, what is the impact of such a legislative overload on organisational and personal ethics? If the law tries to anticipate and regulate every aspect of workplace activity, what space is left for innovative and voluntary action?
In an effort to boost the spirit of innovation, the French government is exploring a number of possibilities. One that has created its fair share of debate is the argument that making labour legislation more flexible will increase inventiveness and profitability. While this finds support with those who favour liberal models, the ethical dimension of such a move should not be neglected. Indeed ethics and innovation can be seen as going hand-in-hand. Ethical ways of doing business often require new approaches, which in turn can boost innovation, enabling a company to come up with new ideas and steal a lead on their competitors.
So the question is not so much whether reducing the burden of legislation will lead to a reduction in ethical behaviour, but whether having too much employment law has the same effect.
The French love their philosophy and, with the risk of becoming a little technical, three classic philosophical views on ethics can be used to dissect business ethics and their relationship with French law.
The formalist view has grown out of the work of Kant, the consequentialist view is based on the philosophies of Mill and Bentham, while the ethic of virtues goes all the way back to Aristotle. So, how could each of these approaches apply to in-company ethics and the law?
The formalists believe that ethics is simply a case of following rules without bending them. We have no right to question the law because we should simply accept its good sense. This notion is normally strongest in societies (such as the French business community) where a large number of laws exist.
Studies carried out in sectors such as auditing highlight just how much sway this formalist mindset dominates in France. The result is that the spirit of criticism is reduced to a minimum. French bosses will therefore tend to presume that if they follow the law to the letter they cannot be faulted in terms of ethics. No soul-searching is required because respecting the rules allows no flexibility. However history is replete with examples of how this codified conception of ethics can lead to behaviour that is very far removed from the notion of justice.
A consequentialist would argue that ethical decisions are based on their consequences and not on whether the rules should be respected or not. Once again, in a legal environment where the sanctions are heavy if a certain employment law is not respected, it would be logical that business leaders would simply be guided by the law. With a rise in the number of cases brought before French industrial tribunals, Gallic CEOs would be running a major risk by adopting anything other than a formal and minimal understanding of ethics. Basically, any innovation could turn around and bite them.
Which leaves us with the disciples of Aristotle. Those who adhere to the ethics of virtue highlight the gulf that can exist between an arsenal of employment laws and the personal values of those asked to respect them. Aristotelians argue that true ethics is not simply applying the rules without question, but rather having the courage to act on oneís conscience by drawing on past experience that can help invent new answers to problems that crop up in the world of work.
This approach favours innovation and a quest for justice - which puts it far from the inspiration behind French employment law. What needs to be stressed is that this view is at odds with the countryís workplace legislation that exists not to make employers more ethical, but to ease social relations.
What emerges from such an analysis is that due to a large extent to Franceís past and present history of union action, it is no surprise that its legal framework mainly seeks to address the tensions that can occur between workers and their bosses. In such a context there is simply no room to encourage ethical innovation. Any deviation from the strict legal line is just too big a risk to take.