2003 Annual Review for France

This record reviews 2003's main developments in industrial relations in France.

Political developments

No political elections were held in 2003 and the governing centre-right coalition of parties (headed by Prime Minister Jean-Pierre Raffarin) and President Jacques Chirac enjoyed a period without major elections, which will come to an end in the spring of 2004, when regional elections will take place. During the year, the government took a series of much-debated initiatives in the social policy area, notably in terms of pensions reform (see below under 'Legislative developments'). The year saw a steady worsening of the economic situation. The predicted economic growth rate for the year was repeatedly lowered, ending up at 0.2%. The government had to make difficult decisions to keep the lid on a high public spending deficit that was the subject of remonstrations by the European Commission. Overall, polls indicated that the level of confidence expressed in the government slowly diminished over the year. Consumers curtailed their propensity to spend, following several years during which consumption had accounted for a substantial part of the country’s economic growth. The weakening of social welfare programmes and fears about employment seemed to place a section of the population in a more fragile situation and induce anxiety. Thousands of jobs were lost, notably in industry, and by the end of November 2003, unemployment stood at 9.6%, which was a 5.8% increase over the year. However, by the end of the year, the increase in unemployment seemed to have halted and there was a slight upturn in optimism regarding economic prospects.

Collective bargaining

National intersectoral collective bargaining significantly influenced the course of political events in a number of areas in 2003, such as pension reform, unemployment benefit and vocational training (see below under 'Legislative developments'). Such national bargaining on solidarity-related issues received more attention than more traditional sector and company-level bargaining.

Pay

No data are yet available on the pay outcomes of collective bargaining in 2003. Sector and company-level bargaining continued to combine discussions on pay and working time, with signs of the former regaining precedence over the latter. At the end of the third quarter of 2003, the basic monthly wage for all private sector workers had increased by 2.5% over a 12-month period, compared with an inflation rate of 2.3% (for the year to the end of November). The national minimum wage (SMIC) was raised by 5.3% in July 2003 following a government decision taken in 2002 (FR0209105F). In its annual report on the bargaining carried out in 2002, the Ministry of Labour emphasised that the majority of sector-level agreements set minimum pay rates that are lower than the statutory SMIC.

In the civil service (not covered by the SMIC), the government decided against any collective pay rise for 2003. This caused protests from the unions, but brought no outright dispute (FR0401102N).

Working time

Since 2000, companies with more than 20 employees have been obliged by law to apply a 35-hour working week. The bargaining on working time that applied the law continues to have an impact. In June 2003 (according to INSEE figures), the average working week for full-time employees stood at 35.6 hours, a 0.2% decrease over a year. A total of 79.9% of full-time workers in companies with 10 or more employees worked fewer than 36 hours per week, as opposed to 78.2% one year previously. It is smaller companies that are currently lowering working time. However, as of June 2003, an employee of a firm with a staff of between 10 and 19 worked almost two hours more per week on average than an employee of a company with more than 500 workers. When it took power in spring 2002, the current government decided upon a moratorium concerning the application of statutory working time reduction measures to companies with fewer than 20 employees. At the end of 2003, the government passed a law again postponing this extension for two years (until the end of 2005). Employers welcomed this move, while trade unions disapproved of both the method and the content.

The effects of the reduction in working time over recent years have been controversial and are currently the focus of an assessment procedure in the form of a parliamentary enquiry.

With the aim of helping balance social welfare spending, the government decided in autumn 2003 (with no consultation) that one public holiday per year would be abolished.

Job security

An increasing number of mass redundancies during 2003 returned the issue of job security and/or the quality of measures on redeployment, outplacement and training contained in redundancy plans to the top of the industrial relations agenda (FR0309104F). Major restructuring plans were announced by companies such as GIAT Industries (arms manufacturing) (FR0305101N) and Alstom (engineering) (FR0306101N), while high-profile bankruptcies included Air Lib (civil aviation) (FR0307103N), Metaleurop (metalworking) (FR0302103N) and Daewoo-Orion (cathode-ray tubes). Some cases of restructuring were accompanied by innovative company-level bargaining. For example, in May 2003, a 'methods agreement' was signed between trade unions and management at GIAT Industries, setting out a procedure and timetable for consultations over a major restructuring plan involving large-scale job losses which the company announced in April.

In March, the government launched intersectoral negotiations among the social partners on the compensatory employment-related measures to accompany restructuring (FR0303106F). Several meetings were held during 2003, and the talks were planned to end in early 2004. The debates were marked by the vehement opposition of the trade unions to a draft plan for amending the legislation on restructuring proposed by the Movement of French Enterprises (Mouvement des entreprises de France, MEDEF) employers' confederation (FR0311106F). The plan suggests anticipating the changes affecting companies and 'improving the management of restructuring', and stresses the implementation of a lifelong training policy. To this end, larger firms should be obliged to draw up a forward management plan covering staffing levels and skills, and consult the works council on this issue on an annual basis. MEDEF also advocates a reduction of the time spent on informing and consulting the works council in the event of redundancies, and raising from 10 to 20 the number of redundancies within a company which leads to a legal requirement on the employer to produce a 'social plan', as well as limiting employees’ opportunities to use the courts and shortening collective redundancy procedures.

Equal opportunities and diversity issues

There were few significant new collective agreements on equal opportunities and diversity issues during 2003. One exception was a November 2003 agreement on the promotion of female employment and gender equality at the PSA Peugeot Citroën motor manufacturing group. The objective of this deal is to bolster a policy of recruiting more women and working towards a better gender balance in the workforce. At national intersectoral level, negotiations on this same issue of gender equality and gender balance in workforce composition began in June 2003, but had not yet produced results by the end of the year (FR0404104F). Various studies published during 2003 (FR0304104F) highlighted various areas of persistent gender inequality in work and family life, such as: the impact of working time reductions on family life; the implementation of a new paternity leave scheme introduced in 2002; fathers' participation in parental activities; and significant pay disparities between women and men (often due to poor practice in recognising women’s skills and qualifications).

The theme of racism in the workplace, especially in recruitment, received considerable attention during 2003.

Training and skills development

In September 2003, all the central social partner organisations signed a national intersectoral agreement on 'employees’ lifelong access to training' (FR0311103F), thus ending negotiations which began in 2000. Among other provisions, the agreement provides that employees with more than 12 months’ service with their company will be accorded a 20-hour 'credit' per year (pro-rata for part-timers), which can be rolled over for six years. This credit is aimed at enabling the employee to take training either during or outside working hours, depending on the provisions in the applicable sectoral or company-level agreement. Hours of training carried out during working time are paid at the usual rate, while training carried out outside working hours will be paid at 50% of the net wage. Exercising their new right to training is left to the employees' initiative, but must be the subject of a formal agreement with the employer. The agreement also raises employers’ contributions to the funding of training. The agreement is particularly notable because it was signed by the General Confederation of Labour (Confédération générale du travail, CGT), a trade union confederation that had not previously signed an intersectoral agreement since 1995. This rare unanimity meant that the impact of the agreement was considerable. However, the government’s transcription of this agreement into draft legislation was criticised by trade unions.

Other issues

In spring 2003, the government launched consultations - not negotiations in the strictest sense - with the social partners, on the issue of amending pension schemes. The key issues in these talks included bringing the basic scheme for civil servants (but not some special schemes) into line with the private sector scheme, and the pensions eligibility criteria for private sector workers who started work at an early age. A common trade union platform on this issue was set up in January (FR0302108F). The government eventually gained the support of two union confederations - the French Democratic Confederation of Labour (Confédération française démocratique du travail, CFDT) 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) - progressively to raise civil servants’ required pension contribution period from 37.5 to 40 years by 2008 (FR0306104F). Parallel to this measure, alterations were agreed to the planned measures on eligibility criteria for employees with long working lives and on minimum pension levels. The adoption of the pensions reform legislation followed in July (see below under 'Legislative developments').

In November, the central employers' associations and four out of five representative trade union confederations (the exception being CGT) reached an agreement on the jointly-managed ARRCO and AGIRC supplementary pensions schemes (FR0312103N). This five-year agreement maintains provisions enabling retirement with a supplementary pension from the age of 60, transcribes a number of provisions contained in the pension reform law, and takes action to balance the schemes' budget.

In June 2003, employers' organisations and three trade union confederations representing a minority of the sector's workers - CFDT, CFE-CGC and the French Christian Workers' Confederation (Confédération française des travailleurs chrétiens, CFTC) - reached a new agreement on the special unemployment insurance scheme for workers employed sporadically on fixed-term contracts in the entertainment industry (FR0307104F). The accord imposed stricter entitlement criteria and reduced the benefit payment period. It was met with major protest action by the employees affected and the non-signatory unions. Parts of the agreement were renegotiated in July following an appeal by the Minister of Culture. However, the protests intensified, eventually resulting in the cancellation of a number of major summer arts festivals (a substantial source of economic activity in some regions).

Legislative developments

The government's controversial pension reform law (see above under 'Other issues') was passed by the National Assembly on 24 July 2003 and then by the Senate, being published in its final form (as law no. 2003-775) on 21 August 2003 (FR0309103F). The other main legislative development of 2003 was a government proposal for a new law on vocational training and social dialogue, which was nearing adoption in parliament at the end of the year. As well as implementing the social partners' intersectoral agreement on training (see above under 'Training and skills development'), the law will introduce major changes to the legislative framework for collective bargaining - see below (under 'The organisation and role of the social partners'). Furthermore, a law introducing a new 'minimum employment income' (revenu minimum d’activité, RMA) scheme and decentralising the existing 'minimum integration income' (revenu minimum d’insertion, RMI) benefit and assistance programme for people facing labour market difficulties was passed by parliament on 10 December 2003 and came into force on 1 January 2004 (FR0401103N)

As indicated by the above, many of the year's changes to employment and industrial relations norms involved a combination of legislation, collective bargaining and consultations (eg on pensions, vocational training and social dialogue). This absence of clear boundaries between the respective jurisdictions of parliament and of the social partners is a persistent feature of French industrial relations.

The organisation and role of the social partners

The respective roles of the law and the social partners in employment-related decision-making, as well as the representativeness of social partner organisations, was a hot topic in 2003. A draft law on social dialogue and collective bargaining reform was debated in parliament and nearing adoption by the end of the year (FR0304103N and FR0311101N). It will alter the current rules granting priority to the law and sector-level agreements in favour of a greater role being granted to the decentralised levels of bargaining; under certain conditions and on certain subjects, company-level agreements may deviate from rules set at what were previously considered higher levels - agreements at sectoral and intersectoral levels, and legislation. Furthermore, the signature of one or more unions with representative status is currently enough to validate a collective agreement, but the new law provides that collective agreements must essentially have the support of (or not be opposed by) a majority of representative trade unions or of unions representing a majority of employees, in order to be valid.

The new legislation was inspired by a 'common position' on collective bargaining reform agreed in July 2001 by employers’ organisations and four trade union confederations - CFDT, CFE-CGC, CFTC and the General Confederation of Labour-Force ouvrière (Confédération générale du travail-Force ouvrière, CGT-FO) (FR0108163F). However, not all the signatory unions of the 2001 document approve of the new law. MEDEF, the largest employers’ association, backed the draft legislation and had amended its own internal organisation to adjust to more decentralised bargaining.

The government also announced a discussion on bargaining procedures in the civil service at the same time as it decided that civil servants would receive no pay rise in 2003 (FR0401102N).

The results of works council elections announced during 2003 demonstrated a continuing rise in support for union-backed candidates at the expense of non-union candidates, though turn-out in these elections is falling (FR0303108F and FR0311102N).

It is thought that the CFDT union confederation's stance on pensions reform (see above) has cost it members, though it is not known how many. In several significant workplace elections of employee representatives in late 2003 (eg in the health and energy sectors - FR0402105N), it recorded decreases in support of around 15%-20%.

Industrial action

Over the long term, the number of labour disputes has been declining in France. However, 2003 was an exception to this trend, largely owing to the high level of industrial action that occurred in the spring during the discussions on pensions reform. (FR0305103F and FR0306104F). There were major national protest strikes and demonstrations, notably on 13 May, as well as specific action in sectors such as public transport and the state education system. Indeed, the fact that the pension reform and changes to the status of some categories of personnel in the state education system were announced almost simultaneously made this sector especially active in these disputes (FR0306102F and FR0309103F). However, workers in the private sector, which underwent a reform of basic pensions in 1993, hardly mobilised in opposition to the new reform.

Other high-profile examples of industrial action during 2003 included the following:

• a refuse collection strike affected a large number of cities over May and June (FR0307106F). The industrial action, mainly concerning public sector workers but also some employees of private companies, partly overlapped with the national wave of protests over the reform of the pension system (see above), but also reflected existing problems in the sector;

• a strike was organised on the SNCF railway network in March, in protest against the recent opening up of international freight transport by rail to competition within the EU (FR0304106F);

• in February, strike action closed down most branches and other workplaces of Banque de France, after the announcement of a reorganisation of the French central bank’s network (FR0303102N); and

• major industrial disputes in Guadeloupe - a French overseas département in the Caribbean - driven by a slump in the island’s economy (FR0302111F).

Following various disputes in the public services, the government started to examine the possibility of establishing, at the outset of disputes, a minimum level of service to be provided - especially in the public transport sector. This issue provoked a heated debate.

Increasingly, practitioners and experts have noted what they see as a shift from collective disputes toward more individual forms of strife that are sometimes marked by violence. Little known and often covered up by the parties involved, this phenomenon is particularly worrying for human resources managers, who lack the means of obtaining knowledge and sources of information on this subject. Several recent meetings and round tables in 2003 stressed this problem.

Employee participation

No information is available on any moves during 2003 to implement the EU information and consultation Directive (2002/14/EC) (EU0204207F) or the employee involvement Directive (2001/86/EC) linked to the European Company Statute (EU0206202F). The only legislative development related to employee involvement was that the proposed legislation on collective bargaining reform (see above under 'The organisation and role of the social partners') allows for referenda in which employees are consulted in order to validate or invalidate an agreement signed by one or more trade unions.

Stress at work

The issue of work-related stress has steadily climbed the agenda in terms of research and specialist seminars. However, there were no specific legislative or collectively-agreed measures in this area in 2003.

Undeclared work

Undeclared work accounts for between 10% and 20% of GDP. An official report on this subject, published in February 2003 (La lutte contre le travail illégal en 2001[The struggle against illegal work in 2001], ACOSS), states that it is a growing phenomenon and that it is assuming increasingly subtle and varied forms - such as employment of undeclared workers, non-payment of social security contributions, incomplete declarations and disguised outsourcing - and may involve companies with hitherto spotless records. There are an increasing number of sectoral and regional partnerships and collective agreements on the issue, and these seem the most effective way to combat this problem, as it means that the social partners at the various levels become involved. Despite increasing efforts to detect and prevent it, and the development of these partnerships over several years, the authorities have noted a rise in the amount of undeclared work.

New forms of work

There were no new laws or significant agreements in 2003 on 'atypical' forms of employment such as part-time work, fixed-term work, temporary agency work and teleworking. The year's slowdown in economic activity had a direct impact on the most precarious jobs - ie fixed-term and temporary agency work. For example, between October 2002 and October 2003 (according to INSEE figures), the number of employees engaged in temporary agency work fell by 4.5% to 612,000 people.

The question of adjusting forms of employment to help in the fight against unemployment will be the subjects of a bill to be issued by the Ministry of Labour in 2004. The purpose will be to broaden the possibilities for specific employment contracts to cover the varying durations and patterns of work necessary to accomplish certain tasks.

Outlook

Changes in the eligibility rules for unemployment benefits and a reform of sickness insurance will be prominent issues in 2004 - these are areas of social welfare where traditional joint employer-union management is being debated. The reform of unemployment insurance will probably lead to the eligibility criteria for benefit being tightened up and to employees being pushed to find jobs more quickly, even where these jobs are are less rewarding than their previous employment (FR0301106F). The reform of sickness insurance had been planned for 2003, but social tensions arising during the discussion of pension reform led to the government postponing it (FR0311104F).

Early 2004 should see the final adoption of the new law on collective bargaining reform, while a draft law will be proposed concerning 'mobilisation on employment', which should include proposals for new forms of employment contracts to cover specific assignments. (Christian Dufour, IRES)