Leading article: The young will not find jobs if they are overprotected

You wouldn't start from here. Unfortunately here is exactly where President Jacques Chirac does start from - with a million demonstrators on the streets, two-thirds of universities closed and the biggest protests France has seen since May 1968. And the protesters are in a belligerent mood. Before trade union and student leaders went into talks yesterday with the French Interior Minister, Nicolas Sarkozy, they brushed aside the deal Chirac has offered over the proposed new youth employment law. Originally, it was to allow French companies to hire and fire people under 26 without explanation in their first two years of work. The President had suggested amending the period to one year and requiring employers to offer a cogent explanation, as well as a severance package.

To an outsider that looks a sensible compromise. Youth unemployment is currently running at 23 per cent in France and is as much as 40 per cent in the sink estates where last year's violence was worst. The baleful effects of France's rigid labour laws are largely to blame. They protect those in work, but do nothing to get the unemployed into a job. Employers do not take on many new staff because it is almost impossible to fire them if they prove unsuitable or are no longer needed. So a few get jobs, most can find only short-term contract work, and many have nothing at all.

The new law tried to tackle that. But it has failed, for two reasons. The most profound is that it jars with something central to the leftism fashionable among young people in France. This is not the expansive idealist internationalism of 1968. Rather this modern leftism is inward-looking; it wants state intervention to preserve a jobs-for-life system. It is for heavy regulation and against free trade and filthy capitalism. It sees the new law as a symbol of a global economic order it wants nothing to do with. "We want an answer to unemployment that is French," the protesters insist. The trouble is that 75 per cent of young people in France, craving job security above all else, say they want to be public servants. If that is the French answer, it is no answer. And for the eurozone's second largest economy to play the ostrich in this way is bad news for the future of Europe in a world where competition will only increase over the next decades. The second reason for this French farce lies in the way that the new law was introduced by the country's patrician Prime Minister. Dominique de Villepin - a man who, thanks to the French political system, has never had to dirty his hands with the business of getting elected - was maladroit in the way he introduced it. Recognising that labour laws had to be made more flexible he chose to begin with the young - and was seen to have placed the burden of change disproportionately on a small section of the population.

Much more widespread change is needed. Trade unions need to take on board that a system in which people can get fired with a month's notice but can then find work fairly quickly might serve their members better than one in which they have "job security" but it takes five years to find another when you lose one. Landlords need to make less rigid a housing market in which it is almost impossible to rent a home if you lack permanent employment. And banks need to be more flexible in applying similar criteria to those who want a loan or mortgage.

There are signs that M. Sarkozy, who has consistently out-manoeuvred M, de Villepin in the jockeying to succeed M. Chirac as president, understands this. He is talking of the need for reform which is much wider and more coherent. Just how he will bring that about, in a country which seems unable to have a calm discussion without resorting to the barricade, is another matter.