Just over 100 days into the still youthful presidency of an equally youthful president, Emmanuel Macron looks set to deliver upon one of his central election campaign promises: The radically centrist reformation of French labour laws, with the aim to improve the efficiency – and, it is claimed, the efficacy – of the famously truculent, and often lethargic, French labour market.
As reported by Politico.eu, the French Republic’s recently elected president is keen to deliver upon his promise to kickstart France’s economy through long-overdue, but wickedly controversial, structural reforms, in what appears to be a bid by President Emmanuel Macron to staunch the short-term political wounds early into his presidential term. This should afford the President enough time that the true effects of his ‘Copernican revolution’ can be judged on their merits. Given the current low-ebb in his popularity, which currently stands at a derisive -14 percent favourability according to the latest IFOP polls (down from an immediate post-election high of +62 percent), this may be a calculated gamble by the Fifth Republic’s neophyte would-be Dauphin to absorb the early pain in the hopes of reaping the electoral rewards later.
But is the controversy surrounding President Macron’s much-promised labour reforms truly warranted? Here’s a summary of the plan so far:
First of all, and arguably most controversially, is the proposal to reduce the role of sector-wide collective bargaining in the workplace, whilst simultaneously increasing individually-negotiated employee contracts agreed between the employee and the employer. Here, the potential for misuse and abuse by employers with a power imbalance over their employees is quite clear, and is undoubtedly the source of much of the antagonism the proposal has already generated within France’s trades union sector. A secondary aspect to this proposal is “wage flexibility”, which would permit employers to agree what would – in practice – amount to a wage freeze (either in real per capita income terms, or simply through a reduction in working hours, as is the case with Germany’s Hartz Reforms) when supposed market conditions warrant it. Who decides what those conditions are, how and/or if they have been met, and indeed, the duration of those conditions, is yet to be determined. Expect to hear more on this point.
The second plank in President Macron’s proposed reforms concerns corporate profitability and employee redundancies. As things currently stand, if a French-based company wishes to cut the number of active employees in order to reduce costs, French labour law inhibits management’s freedom to do so if and when the company maintains corporate profitability in its global operations, even where its French operations are loss-making. France’s declining steel industry is a good example of the “difficulties” employers sometimes incur on this basis. Under the new proposals, however, global corporate profitability will no longer be a sufficient impediment to the termination of a company’s French employees if the France-based branch of that company is not profitable; this represents a significant degradation of France’s famously robust employee protections. Given globalised supply chains and production patterns, French workers would be well within their existing rights to query why their job security should be threatened by a company’s overseas operations being more profitable due to lower per unit wage labour costs. Anachronistic or not, it is clear that a solution has still to be settled upon as regards the rights of nationally-based labour in the face of globally-based corporate profitability.
Proposal three in the Macron labour market reforms package is the regularisation and minimisation of damages in the case of wrongful dismissal. Whereas under existing law there is no upper ceiling on the amount of damages arbitration courts can award to a terminated employee in the case of wrongful dismissal, under the recommended amendments, the amount of damages that can be awarded is to be regularised in line with the duration of the terminated employee’s employment prior to having been wrongfully dismissed. As reported in the Politico article, this is likely to be a highly unpopular amendment with employees, but does have the benefit for France-based companies in terms of the predictability of their potential financial liabilities.
When it comes to labour laws, France is notorious for its bureaucratic red tape, which in some ways is what makes President Macron’s fourth labour law reform proposal so interesting. Designed with Small- to Medium-sized Enterprises (SMEs) in mind, the fourth proposal seeks to reduce the costs of bureaucratic red tape by reducing the duplication – or, in this case, triplication – of requirements once an SME hires their 50th employee. In place of nominated workers’ representations, works councils, and occupational health and safety committees, a single and simplified structure will take their place. As reported by France24, whilst this may be a necessary reform to help SMEs ‘streamline negotiating channels within companies’, thereby reducing operational costs (which may benefit French employees in the medium term), there is a risk that these efficiency drives may come at the expense of employee representation, participation in the workplace, and indeed, worker safety.
The final proposal, meanwhile, is to effectively de-nationalise the regulation of short-term contracts; the benefits and conditions for long-term, permanent contracts remain unchanged. For employees working casual, part-time, or in mini-/midi-jobs, however, the proposals could be significant. Under current conditions, the duration and number of times a short-term contract can be renewed (a maximum of two times) are both set by national law. The proposal, however, would see both the duration and renewal conditions determined sector-by-sector, such that the newspaper industry might decide upon four month contracts and a maximum of six renewals. Whilst this could permit greater cross-sector flexibility in the French economy, an increased prevalence in short-term contracts as seen in French academia does incur both personal risk and opportunity costs for the employee, but at minimal risk to the employer.
As his personal popularity continues to plummet, and in spite of the obvious necessity for reform to help deal with long-term unemployment in France which consistently remains above the OECD average, President Macron’s reforms seem set for a hard sell even with parliamentary support already assured. With Reuters reporting that France’s powerful General Confederation of Labour (CGT) trade union has called for nationwide protests against the proposals for September 12, it might be rued by Macron that only in France is a President protested against for delivering on a campaign promise: C’est la vie, c’est la France.