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2001 Annual Review for France

This record reviews 2001's main developments in industrial relations in France.

Political developments

Local elections in 2001 resulted in a sizeable decline in support for the Socialist Party (Parti Socialiste), the Communist Party (Parti Communiste Français) and the Greens (Verts), which make up the governing 'plural left' (gauche plurielle) coalition. In political terms, 2001 was above all a year of transition leading up to 2002, when a presidential election (with rounds of voting in April and May) will be followed by parliamentary elections (in June). Observers are keen to see whether the 'cohabitation' of a conservative President and a left-wing government will give way to more suitably matched parties occupying these executive positions.

In the tense run-up to this critical election period, social issues played a considerable part in the strategies of the political protagonists in 2001. Topics which emerged in the election campaigns, which began early, included the application of the recent legislation on the 35-hour week, the organisation of the health system, the reform of retirement pensions, and the relative weight of legislation and collective agreements in governing employment and social issues. Trade unions and employers' associations also used the run-up to the elections to put forward their strategies. The Movement of French Enterprises (Mouvement des entreprises de France, MEDEF) employers' confederation showed its eagerness to play a role in the election campaign, seeking to alter the relationship between the state, the employers and the unions in the long term (FR0102134F).

Political debate in 2001 also touched on the clear slowdown in economic growth, which began falling off from summer 2001, from almost 3% to about 2% at the end of the year. Unemployment began to rise at the same time, breaking a four-year pattern of continuous reduction (FR0110107F). At the end of November 2001, unemployment (using the International Labour Organisation definition) stood at 2.39 million, a rate of 9%. However, paid employment continued to rise: by 2.3% in the year ending 30 September 2001, bringing the total to 14.97 million employees. Thus, the government led by Prime Minister Lionel Jospin, which took office in June 1997 at a time when unemployment had begun to fall, is now less identified with the long phase during which France experienced greater levels of growth than most of its main European partners, with jobs being created, a reduction in working time and consumer spending at a consistently high level.

Collective bargaining

Statistics on the number of collective agreements and the level at which they were negotiated in 2001 will not be available until June 2002. In addition, the laws passed in 1998 (FR9806113F) and 2000 (FR0001137F), on the reduction of working time and the introduction of the 35-hour working week have caused serious disruption to the patterns and levels of negotiation. Quantitative comparisons are therefore relatively meaningless for this period.

Under the industrial relations overhaul process launched by the MEDEF employers' confederation in 1999 (see below under 'The organisation and role of the social partners'), in July 2001, four out of five trade union confederations and three employers' organisations agreed a 'common position' setting out their wishes for a reform of the rules governing collective bargaining. The central plank of this proposed reform is the introduction of the 'majority principle', whereby company-level agreements would be valid only with the support of unions which together won a majority of votes at the most recent workplace elections of employee representatives. The trade union signatories were the French Democratic Confederation of Labour (Confédération française démocratique du travail, CFDT), the General Confederation of Labour-Force ouvrière (Confédération générale du travail-Force ouvrière, CGT-FO), the French Christian Workers' Confederation (Confédération française des travailleurs chrétiens, CFTC) and the French Confederation of Professional and Managerial Staff-General Confederation of Professional and Managerial Staff (Confédération française de l'encadrement-Confédération générale des cadres, CFE-CGC). The employer-side signatories were MEDEF, the General Confederation of Small and Medium-sized Enterprises (Confédération générale des petites et moyennes entreprises, CGPME) and the Craftwork Employers' Association (Union professionnelle artisanale, UPA).

Pay

The pay consequences of the statutory reduction of working time over the past few years have been major, but difficult to assess with precision. Many company agreements have provided for wage freezes lasting several years, though the labour market for some categories of staff has shown signs of shortage. The index of hourly pay for manual workers rose by more than 4% over a year to the end of the third quarter of 2001, while the index of monthly pay for all employees rose by 2.5% over the same period. Inflation stood at 1.2% over the period November 2000- November 2001.

The hourly rate of the national minimum wage (salaire minimum interprofessionnel de croissance, SMIC) was raised by 4.05% to EUR 6.67 in July 2001 (FR0107171F). However, measures introduced to protect the wages of employees paid the SMIC in the context of the change from a 39-hour to a 35-hour working week, meant that SMIC earners who had already moved to the 35-hour week received a smaller rise, accentuating an increasing diversity in minimum wage rates. The emergence of a 'two-tier SMIC' was criticised by both trade unions and employers.

In the public sector, pay negotiations broke down in April (FR0105154N) and the government unilaterally decided to pay a 1.2% rise to its employees in 2001 and 2002.

Working time

In the wake of the recent legislation reducing weekly working time to 35 hours, working time has become the focal point of bargaining at company and sector level in recent years. Framework agreements on the issue were reached in most industries between 1998 and the end of 2000 and 2001 saw the implementation of many of these national agreements. A controversial 35-hour week agreement was signed in the insurance sector in July 2001 (FR0110103N), while in June, an agreement was signed on this issue in catering (FR0107166N). The catering sector currently has a 43-hour week and is predominantly made up of small and medium-sized companies - given these special characteristics, the government agreed specific measures to support the move to the 35-hour week. At company level, a controversial 35-hour week deal was concluded at Michelin in March (FR0104145N).

In 2001, the focus of bargaining on working time reduction was largely on the public sector. The 35-hour week was due to come into force for all civil servants on 1 January 2002. In the central government civil service, which has 2.2 million employees, the failure of overall working time reduction negotiations in February 2000 meant that each ministry had to take responsibility for deciding the format for the transition to the 35-hour week (FR0003151F). By late 2001, almost all ministries had worked out their national framework for working time reduction, based either on an agreement signed by trade unions or a unilateral decision by the ministry in question (FR0110113F). The procedures followed varied. An agreement on the introduction of the 35-hour week in public hospitals was signed by four out of eight trade unions represented in the sector in September 2001 (FR0110102N). The accord is a framework agreement to be used as a basis for negotiations in each hospital.

From 2002, companies with fewer than 20 employees must also implement the reduction of working time. To facilitate the changeover to the 35-hour week for these companies, the government agreed to increase the annual statutory overtime quota, from 130 hours (the norm for companies with more than 20 employees) to 180 hours, on a temporary and annually decreasing basis between 2002 and 2004 (FR0110108F).

Average normal weekly working time was 36.12 hours per week as at the end of September 2001, constituting a drop of 1.7% over a 12-month period. In September, 68% of full-time employees in companies with more than 10 employees were working less than a 36-hour week, compared with 52.9% a year earlier.

Pay inequalities

In August 2001, the National Institute of Statistics and Economic Studies (Institut national de la statistique et des études économiques, INSEE) published a study on wage disparities between men and women (FR0109106F). The unexpected finding that the wage gap has widened to women's disadvantage over the past 20 years demonstrates the extent to which the position of women in the labour market and in employment is very different from that of their male counterparts. Men and women of strictly equivalent training and employment do not receive equal pay .

Job security

The main drivers of job security bargaining over the past few years have been the 1998 and 2000 35-hour week laws (see above under 'Working time'), which encourage companies to negotiate a reduction in the working week and provide for reductions in employers' social security contributions if the agreement also saves or creates jobs. In June 2001, the National Economic Planning Agency (Commissariat général du plan) published a report assessing the achievements of the legislation to date (FR0107170F). The report estimates that the new laws have resulted in the creation of a net total of 265,000 new jobs, which will increase to 500,000 once the law is fully implemented in small firms.

Training and skills development

After a 10-month process, talks between the central social partners on vocational training reform, which formed part of their 'industrial relations overhaul' project (see below under 'The organisation and role of the social partners'), ended in failure in October 2001. The trade unions and employers' organisations were unable to reach agreement on the distribution of the burden of training costs to be borne by employers and employees. Discord on the employers' side was a major factor in the demise of the talks (FR0111123F).

Other issues

Under the industrial relations overhaul process launched by the MEDEF employers' confederation in 1999 (see below under 'The organisation and role of the social partners'), agreements were concluded by employers' organisations and at least some representative trade union confederations in 2001 covering the reform of supplementary pensions (FR0107168N) and collective bargaining reform (see above under 'Collective bargaining').

Legislative developments

Perhaps the most high-profile legislative development in 2001 was the passage of the so-called 'social modernisation' bill (FR0101121F), which was finally approved by parliament in December. The law contains a wide range of provisions, including: improved accreditation of vocational skills and experience; measures to tackle precarious employment (through restrictions on fixed-term contracts); and measures to combat 'moral harassment' (bullying) at work (FR0105152N). However, it was the law's sections aiming to make redundancies more onerous for employers that proved most controversial and were the subject of long and heated debates (FR0107172F). On one side, the advocates of tighter controls argued that on several occasions, collective redundancies had accompanied the announcement of profits and not just bankruptcies, giving the impression that employment levels were merely one variable to be used for economic 'fine-tuning'. From another perspective, employers' organisations maintained that the complex and time-consuming nature of the planned procedures would eventually militate against higher employment, and would hinder France in the face of its foreign competitors.

When the law was passed in December, the parliamentary opposition questioned its constitutionality, referring the matter to the Constitutional Council (Conseil constitutionnel), which issued its judgment in January 2002 (FR0201102F). The Council generally approved most of the law's redundancy provisions, including: the doubling of the minimum redundancy compensation; the extension of deadlines; the requirement to convene negotiations on the 35-hour week prior to any redundancy plan; increased powers for works councils; nine-month redeployment leave for redundant workers; and a contribution to the regeneration of closed sites by companies with a workforce of over 1,000. However, the provision tightening the definition of collective redundancies contained in the law was ruled too restrictive and therefore unconstitutional. The legislation had sought to provide for only three possible grounds for economic redundancy: 'major economic difficulties where all possible solutions have been exhausted'; 'technological changes endangering the very survival of the company'; and 'reorganisation required to ensure the survival of the company'. As a result of the Constitutional Council ruling, the Labour Code's provisions on this issue - in their unamended form - supplemented by case law, continue to apply.

This was the second ruling from the Council against the government in as many months – in December 2001, it had issued a ruling opposing government plans to provide for the partial funding by social security funds of measures aimed at reducing working time, plans opposed by all the social partners .

Other major legislative developments in 2001 included

  • the adoption in April of a law (2001-397) on gender equality at work. This law lifted the ban on night work for women (FR0010196F), and introduced new regulations for this type of work, covering all employees;
  • the enactment in July (FR0106161N) of a law (2001-624) implementing aspects of an agreement on the reform of the unemployment insurance system reached by employers' associations and some trade unions in October 2000 (FR0101114F) as part of the 'industrial relations overhaul' project (see below under 'The organisation and role of the social partners');
  • the adoption in May of a law on 'new economic regulations' (2001-420), aimed at adding an 'ethical' aspect to financial practices, clarifying competition rules, improving social dialogue and enforcing consumer rights (FR0105156F). On the industrial relations front, the new legislation strengthens to some extent the powers of works councils in takeovers, mergers and proposed share exchanges;
  • the adoption in February of legislation (law 2001-152) reforming employee savings schemes (FR0102129N), following a lengthy period of disagreement between the two chambers of parliament. The main aim of the new law is to increase the scope and duration of employee savings schemes, by extending them to employees of small and medium-sized businesses and increasing the 'lock-in' period for employee savings from five to 10 years; and
  • the adoption in December of the social security funding law for 2002 (FR0112153F), which included a general rise in pensions and increased paternity leave (from three to 11 days).

The organisation and role of the social partners

In November 1999, the MEDEF employers' confederation issued a call for a 'social-partner-led overhaul of the industrial relations system' (FR9912122F). In February 2000, the five representative trade union confederations - the General Confederation of Labour (Confédération générale du travail, CGT), CFDT, CFE-CGC, CFTC and CGT-FO - agreed to respond positively to MEDEF's proposal and work with MEDEF, CGPME and UPA on drawing up a joint framework for the 'overhaul' of the French industrial relations system, and on redefining the rules in order to create 'decentralised, independent, partnership-based dialogue'. MEDEF's proposal was designed to put an end to the 'current confusion over the division of social partner and government jurisdictions'. The trade unions agreed to take part in parallel talks on eight jointly-defined issues (FR0002143F).

Debates on the 'overhaul of industrial relations' continued until the end of October 2001 (FR0102134F). Four of the eight issues for discussion were the subjects of agreements signed by employers' organisations and at least some of the unions with representative status. These covered supplementary pensions (see above under 'Other issues'), unemployment insurance (see above under 'Legislative developments'), health and safety at work (FR0101116N), and 'ways and means of conducting collective bargaining' (see above under 'Collective bargaining'). The issues where no agreement was reached were; sickness insurance (FR0105157F), vocational training (see above under 'Training and skills development'), gender equality at work, and the role of managerial and professional staff. The unions have since once again jointly put forward the idea of negotiations on training.

MEDEF, in an unofficial assessment exercise on its 'industrial relations overhaul' initiative, argued that it felt the number of unions with representative status in France was an obstacle impeding the development of a greater role for the social partners relative to that of the state. It also levelled criticism at the emergence of 'radical' unions, targeting in particular some of member unions of the independent Group of 10 (Groupe des dix) alliance.

In June 2001, claiming that the government's policy had reduced the autonomy of the social partners in the management of the general social security scheme to a bare minimum, MEDEF and CGPME decided not to appoint representatives to the boards of the various jointly managed funds within the scheme (FR0107167N). This led to smaller employers' organisations taking up the vacated seats (FR0111104N). MEDEF has since proposed the privatisation of the management of social security funds, which will be a highly controversial issue in the run-up to the parliamentary and presidential elections. However, the press has several times reported rumours of discord in the ranks of MEDEF on this matter.

In December 2001, the UPA craft industry employers' organisation and various representative union confederations signed an agreement on the conditions for social dialogue in small craft companies, where there is very little union representation (FR0201143N). The accord provides for extra resources for both sides to improve their representative structures. The deal was criticised by employers' organisations outside the craft industry.

The pattern of industrial relations was thus further complicated in 2001 by the intervention of both sets of actors in the other side's sphere of legitimacy. The issue of trade union funding arrangements remained controversial among unions and politicians in 2001 (FR0112114N). The government was thinking of changing the public funding arrangements for unions, but it eventually abandoned the plan.

Industrial action

France continued to experience low levels of industrial action in quantitative terms in 2001. However, there were a number of major disputes in both the public and private sectors.

Several disputes resulted from the government's decision to reduce working time in the civil service (see above under 'Working time') without creating new jobs, and in the hospitals sector it was forced to agree to a plan to create over 40,000 jobs (FR0110102N). In the public and nationalised sector, conflicts arose over the implementation of working time cuts, as well as the issue of pay, and a series of disputes over wages, pensions and early retirement took place at French national railways (Société Nationale des Chemins de Fer Français, SNCF) (FR0104149F) and other transport companies (FR0106160N). The national police and the gendarmerie also experienced disputes related to pay and working time (FR0112115N). In the gendarmerie, the dispute had a potent symbolic dimension due to the military status of its staff who, in theory, do not have the right to go on strike or demonstrate (FR0201144N). In December, teachers also took action over pay and working hours, while disputes in the health system involved various categories of staff, including midwives (FR0105151N).

In the private sector, the most noteworthy disputes occurred over restructuring or closures, such as in the cases of Danone, Marks & Spencer (FR0104147F), AOM-Air Liberté (FR0109175N) Moulinex (FR0111103N), Bata and Michelin (FR0103135N). In smaller companies, strikes sometimes led to employees affected by job losses threatening to destroy factories or equipment (FR0112116N).

National Action Plan (NAP) for employment

The measures which formed part of the 2001 French National Action Plan (NAP) for employment, in response to the EU Employment Guidelines, elicited a very broad range of responses from those involved in industrial relations, with trade unions and employers both being split on the issue. The measures themselves were subject to a wide spectrum of appraisal (FR0106163F). In these circumstances, although on average both employer and trade union representatives broadly stated that they were moderately satisfied with all aspects of their involvement with the NAP, this should not hide the fact that this average level of satisfaction represented a number of highly divergent stances.

Company restructuring

In 2001, large companies in France experienced witnessed several restructuring programmes and closures (see above under 'Industrial action'). This issue has been highly politically and socially sensitive for several years, particularly after Michelin simultaneously announced redundancies and high profits in October 1999 (FR9910113F). The same situation occurred in early 2001 at Danone, which decided to close plants to improve its profit levels (FR0102133F), while the year also saw a number of companies unable to guarantee their survival in current economic conditions and levels of competition, such as Moulinex (FR0111103N) and AOM-Air Liberté (FR0109175N). Part of the growth in unemployment during 2001 stemmed from the restructuring of large groups. Their impact on the figures, however, is limited by the social measures accompanying redundancies, particularly those enabling older employees to withdraw from the labour force prior to the statutory retirement age. Yet in several cases, restructuring has led to an impoverishment of regional labour markets whose structure had been strongly dependent on these large groups of workers.

The laws passed in May (on 'new economic regulations') and December 2001 (on 'social modernisation') (see above under 'Legislative developments') were directly influenced by restructuring measures experienced in 2000 and 2001. In June 2001, a large demonstration took place, albeit not supported by the major trade unions, expressing support for the employees of companies being restructured (FR0107165N).

Employee participation

There were no significant developments in the area of employee participation in 2001. However, the theme of employee saving schemes continued to generate plentiful debate, linked to both the value and form of retirement pensions and profit-sharing schemes. Legislation to foster employee saving schemes was passed in February (see above under 'Legislative developments').

A study published in 2001 by the Institute for Economic and Social Research (Institut de Recherches Economiques et Sociales, IRES) examined the position of women in works councils in France (FR0109103F). It found that women are generally well represented in the position of works council secretary. However, access by women and men to employee representative positions differs, depending on the particular characteristics of the workplace. Women are more likely to be works council secretaries in small, newly-created and non-unionised companies.

New forms of work

The increase in unemployment over the second half of 2001 was partly attributable to the elimination of fixed-term contract jobs, which had been on the rise during the years of stronger economic growth. These jobs have usually been the first to go before structural measures are taken whenever economic activity slows down. An increase in part-time work was discernible during 2001, but this trend seemed to tail off later in the year due to the changes resulting from the reduction of working time.

Other relevant developments

The issue of funding retirement pension systems is still one of the items at the top of the industrial relations agenda. In 2001, the government did not follow up in any practical way several reports produced on this issue. The reserve fund for pensions set up in 1999 is not currently funded adequately in order to meet its objectives (FR0105155N). MEDEF has made this situation a serious complaint in its positions concerning the management bodies running social security funds (FR0107167N). The opposition political parties have emphasised the long-term risks incurred by funding retirement pensions in the current way. This will also be an important issue in the election campaigns. The inequality of the entitlement criteria for a full pension between private sector employees (40 years' employment) and their public sector counterparts (37.5 years or fewer) is one of the main stumbling blocks, at least as much so as questions of funding.

Outlook

Social policy during 2002 will be dominated by the general and presidential elections in the spring and early summer of the year. In terms of collective bargaining, the consequences of the reduction of working time will continue to be felt, in light of the fact that working time reduction legislation now applies to companies with fewer than 20 employees. Pay is unlikely to rise significantly, due to the effects of the working time reduction and the fact that the European economy is currently in a phase of economic downturn.

Other issues which look set to dominate 2002 include the management of social security funds, in the light of the main employers' organisations decision to pull out of the management of these funds, and strategies to cope with industrial restructuring, which looks certain to continue.

Page last updated: 25 March, 2002
About this document
  • ID: FR0201100F
  • Author: Christian Dufour
  • Language: EN
  • Publication date: 25-03-2002