Hundreds-of-thousands of demonstrators took to the streets of Paris, Marseilles and other French cities Tuesday to protest a divisive labor law that makes it easier for companies to hire and fire young employees.

The law, known as "The First Employment Contract," allows employees to fire workers under the age of 26 at any time during a two-year trial period without explanation.

During the past few weeks, students and striking workers have demanded the legislation be repealed. The protests come on the heels of last November's riots by second-generation immigrant youths against unemployment and discrimination.

Reform in Jeopardy

Most analysts say the current crisis has severely weakened Prime Minister Dominique de Villepin and hurt his chances to run in next year's presidential elections.

Mr. de Villepin, the architect of the new law, has argued that it is necessary in order to lower unemployment. While the overall unemployment rate in France is nearly 10 percent, it averages 23 percent for urban youth between the ages of 18-25 and soars to 50 percent in poor suburbs.

President Jacque Chirac signed the bill and recently suggested a compromise to appease protestors that includes cutting the two-year employee probation period in half. But any changes to the law will not take effect until parliament approves them.

Some observers say the Prime Minister did the right thing, pushing for labor reform. But many others fault him for pushing the law through parliament without consulting student and labor organizations. Among them is Alexis Debat of the Homeland Security Center at George Washington University, who applauds the law but questions Mr. de Villepin's approach.

"He wrote it on his own. He did not consult with labor unions or youth movements or even other members of his cabinet. I mean - - it was a one-man law. And I think that this is the de Villepin method. That's how he deals with most problems. But I think that the protests are as much a rejection of this method as a rejection of the socio-economic system that it seeks to impose," says Professor Debat.

Student protestors argue that they are being denied the same benefits and job security enjoyed by France's post-World War II generation. Samuel Wells, an expert on Western Europe at the Woodrow Wilson International Center for Scholars in Washington, sympathizes but says some of these benefits will have to go.

"The average retirement age in France today is 59. They already have a mandated workweek of 35 hours for salaried employees. And they have free medical care and free college education where there is no tuition for public institutions. But they're in a situation where the basic demographics and economics require change. They can't afford the welfare programs that they've got," says Wells.

Job Protection

Some economists add that this social safety net discourages employers from hiring new workers. But New York University sociologist Frederic Viguier disagrees. He says France can afford to maintain its welfare system, even though he concedes that some reform is necessary.

"I personally believe that it can. And, of course, changes need to be implemented, but the changes that were imposed by the new law are not satisfactory. It's true that economic growth has been slow in the last four years, but when compared with other European countries, the situation is not that bad. So the assessment that France cannot afford it , very often meets the goal of getting rid of some of the benefits that French employees enjoy," says Professor Viguier.

But other experts argue that not all segments of society enjoy these benefits and that it is wrong to single out young people to bear the brunt of reform.

Harvard University political economist Peter Hall says the trick is to determine which types of reform are most appropriate. "That's one of the key issues here. France protects its jobs more than most countries. And, probably, it would have to move to policies which make it easier for companies to lay off workers," says Hall.

But analysts familiar with France's history of social dissent note that more comprehensive reform would have caused an even larger furor. They cite the 1968 student uprising for more cultural freedom and the 1995 protests that forced politicians to abandon their efforts to reform social security. The French replaced two governments in the 1990s to protest changes to retirement and employment benefits. Many analysts point to this as proof that the real problem is that the French are afraid of losing their social benefits to globalization.

George Washington University's Alexis Debat says this is a cultural dilemma because the French worry about having to contend with what they perceive as an Anglo-Saxon brand of globalization.

"Of course, globalization is not Anglo-Saxon. But part of the problem is that the socio-economic system that France is living under is now a major component of French identity. And easing labor restrictions, for example, is considered to be a violation of this identity and an import of an Anglo-Saxon business culture," says Debat.

Rising Skepticism

Some analysts say the French view the European Union in the same way. They welcomed it at first, then retreated into protectionism to block incoming foreign labor, and finally became skeptical of the path their country is taking. But Harvard University's Peter Hall says these problems are not uniquely French.

"We find in most of Western countries slow economic growth, which means that jobs are being created slowly and that generous social benefits systems developed in the 1960s and 1970s are often unaffordable. So in one way or another, all of these countries face this problem," says Hall.

Some observers say France and its neighbors may find it harder to maintain their social welfare benefits as they try to compete in the global market. Others say the current protests are as much a rejection of globalization as a rejection of the way The First Employment Contract was passed in parliament. But they add that the French also know that their society is in gridlock, and that, sooner or later, they must make room for some sort of change.

This story was first broadcast on the English news program,VOA News Now. For other Focus reports click here.