2004 Annual Review for France

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This record reviews the main industrial relations developments in France during 2004.

Political data

Regional elections were held in spring 2004, at which the centre-right coalition of the Union for the People's Movement (Union pour un mouvement populaire, UMP) and Union for French Democracy (Union pour la démocratie française, UDF) that forms the national government fared badly. As a consequence, 20 of the 22 regions are now governed by left-wing parties - the Socialist Party (Parti Socialiste, PS), the Communist Party (Parti communiste français, PCF) and the Greens (Verts). The results of the ruling parties in the European Parliament and local elections were also poor, while the far right did not make any gains

The government’s popularity has been waning, according to the polls, and commentators attribute this partly to ongoing social reforms. A leadership battle within the governing coalition has begun, with Nicolas Sarkozy taking control of the dominant UMP party, and aiming to succeed Jacques Chirac as President without his endorsement. On the political left, an internal PS referendum in December 2004 ended with a resounding victory for the proponents of the European Union Constitutional treaty. This led, indirectly to the pack of forerunners for the PS nomination for president in 2007 being reshuffled.

The political atmosphere in part reflects poor and uneven economic growth. Government policy is aimed at reducing the budget deficit after the 2003 figures placed the country well outside the EU norms. The expected recovery in the first quarter of 2004 was not as vigorous as forecast (FR0411105F) and it faded in the face of the rise in oil prices and the euro’s improved performance against the US dollar. Unemployment remained stable at around 10%. However, jobs have been lost and threats of company relocation have contributed to the feeling of insecurity at work (FR0410103N). Purchasing power has stagnated, but consumption is more dynamic than investments, while personal debt is clearly rising. A debate on price structures in the distribution system has highlighted disparities in changes in purchasing power that affect disproportionately the poorest groups.

Collective bargaining

The level of collective bargaining recorded in 2003 fell compared with previous years, a trend that probably continued into 2004, after the intense bargaining carried out on the issue of working time in the 1998-2002 period (FR0408109F). In 2004, national-level intersectoral bargaining slowed down noticeably, while still having a strong influence on the political and social agenda. The unions were urged to exercise care in their commitments made at national level - the major 2003 agreement on pensions (FR0309103F) is seen as having been detrimental to its signatories. In May 2004, individual unemployed people succeeded in mounting a legal challenge to the effects of an agreement signed by the majority of unions on the criteria for unemployment benefit (FR0405101N). Employees have sometimes punished unions heavily at the ballot box locally for stances adopted nationally.

The national intersectoral level of collective bargaining, however. is still highly important. The government is seeking a radical reform of the French industrial relations and social landscape. The health system, working time and the criteria for bargaining themselves have been amended. The unions have distanced themselves critically from reforms that the government is paying for with high levels of unpopularity. The Movement of French Enterprises (Mouvement des entreprises de France, MEDEF), which is the country’s main employers’ organisation, regularly berates the government for hesitancy, particularly over reform of the 35-hour week (FR0408108F).

Despite many months of negotiations between the social partners at national level, intersectoral bargaining on company restructuring processes ultimately failed in the autumn of 2004 (FR0410103N).

Healthcare reform was the government’s principal social objective during 2004 (FR0404104F). Debates in parliament over proposed legislation stretched over the first half of the year. Eventually the law, adopted in July 2004 did not stipulate all the details of the reform (FR0410104F). With the system remaining heavily in the red, income, specifically wages, will be taxed more heavily. Access to care has been reformed, and patients will have to make extra payments for treatments from 2005. An improvement in the system’s financial balance is expected to result from these changes. No trade union supported the reform and few actors in the healthcare system approved it. The reform's criteria for application were still unclear at the end of the year. The government is suspected by critics of postponing a substantial reform that would involve heavy sacrifices for the professionals who prescribe medication and other forms of healthcare: a sensitive political constituency for the political right. Some employers’ circles expected a clearer sense of direction to emerge toward the privatisation of the sickness insurance system.

Pay

Wages rose moderately over the first three quarters of 2004, subject to the contradictory influences of a freeze imposed on civil servants (FR0401102N) and the increase in the national minimum wage (SMIC) (FR0408102N) in the private sector from July 2004. Inflation (at 2.1% over the year) was slightly lower than the average private sector pay rise (2.4%). The decentralisation of collective bargaining, the individualisation of pay rises and the effects of the increase in the minimum wage (5.3% over the year to June 2004), have made the causes of these changes difficult to identify. A number of sector-level agreements on pay have basically aimed to bring their norms into line with those set by the government through the SMIC.

Working time

The period of intense bargaining on working time is over. Weekly working time is no longer being reduced, and has stabilised at around an average of 35.64 hours for more than 80% of full-time employees. A slight trend toward extending working time was even observed in the middle of 2004. The government, which until the end of the year had remained cautious in respect of the legislative amendments demanded by some sections of the employers’ associations (FR0408108F), announced some changes to the law for 2005. These are to allow 220 annual hours of overtime (compared with the current maximum of 180) and enable collective or even individual bargaining on lengthening working time (FR0501101N). Days off awarded in the context of the reduction of the working week and those banked in time savings accounts may be worked and paid. The government has been overtaken on this issue by its backbenchers, who unexpectedly voted to exclude travelling time to and from work from the status of actual working time, meaning that it is therefore no longer paid working time.

Job security

Time-consuming collective bargaining at national level on the safeguarding of employment when redundancies are made failed in the autumn of 2004. The government is thus set to legislate in order to amend an Act passed in 2001, just before the end of the previous parliament. This topic has become a 'hot potato' at a time when companies seem less restrained in making workers redundant in France and creating jobs in countries where wages are lower.

Equal opportunities and diversity issues

In March, the government announced its intention to set up a central authority to address discrimination (FR0412103F). The social partners signed a national agreement in April 2004 (FR0404104F) aimed at reducing gender disparities in terms of recruitment, pay and career development. This initiative has been integrated in company-level agreements. Generally, these agreements do not contain sanctions against behaviour acknowledged to be reprehensible. A report by the Delegation for Women’s Rights, tabled in December 2004, points out that there are very few cases brought under a law adopted in May 2001 that compels the social partners to negotiate on gender equality: 72% of companies report never having negotiated on this issue.

Training and skills development

A national agreement of September 2003 on individual training entitlements (FR0311103F) was given the force of law in May 2004, with, according to the unions, significant discrepancies between the agreement and the legislation. After it was signed, a series of industries and businesses began to transpose the agreement and/or the provisions contained in the law into their own agreements. Observers have noted that, in this period of economic gloom, vocational training is among the first things to be sacrificed.

Other issues

More than any of the topics in the pipeline for bargaining or legislative reform, it has been the momentum of overall social change that has characterised France in this period. The difficult economic situation, pay stagnation, job losses, cuts in civil service employment, redundancies, rises in social security contributions, a reduction in the proportion of medical costs reimbursed, high levels and longer periods of unemployment even for recent graduates, and a restriction in unemployment benefit entitlement - all of these factors make for a difficult industrial relations environment. The government has used the strategy of alternating between collective bargaining and legislation to tilt the scales toward limiting social welfare entitlements while unemployment is setting a ceiling for pay claims. There has been a series of debates - the Marimbert, de Virville, Balmary (FR0403104F), and Camdessus reports (FR0411104F), and proposals by MEDEF in March (FR0404102N) - challenging the legal status of employment contracts, and clearly pointing to changes in the role of work as far as the very principles of access to individual and collective security are concerned. At the end of the year, the Minister of Labour suggested a round of bargaining on this topic as well as the establishment of new job centres.

A large number of sector-level agreements were signed in 2004 in order to implement some elements of the pension reform law (FR0406106F).

Legislative developments

2004 was characterised by significant legislative changes in terms of the validity criteria for collective agreements signed by the social partners. Agreements signed by trade unions with representative status may now be challenged by other representative unions that have a majority of support in the agreement’s area of application. Flexibility has also been introduced, through the law of 4 May 2004 on social dialogue, which allows companies not to apply strictly the minimum norms set out in agreements reached at higher levels (FR0407101N). These amendments however, do not go as far as the employers want in terms of introducing flexibility around sector-level norms and placing limits on the principle of norms decided upon at a higher level setting the parameters for bargaining at lower levels.

The organisation and role of the social partners

The legislative changes referred to above relate to the validity of collective agreements. In the near future, MEDEF should publicise its own strategy in the area of bargaining. It has severely criticised what it views as the government’s inertia in terms of structural reforms. The employers’ association wants sweeping changes in the Labour Code, particularly concerning flexibility in employment contracts and employee representation in companies. The unions came together to oppose these plans but the government may circumvent this opposition by using legislation.

A Ministry of Labour survey ( 'Mythes et réalités de la syndicalisation en France', [Myth and reality in unionisation in France], Thomas Amossé, Premières informations, premières syntheses, DARES, October 2004 n°44-2) calculates the level of unionisation among French employees at 8.2%. This rate exceeds 15% among public sector workers and drops to scarcely 5% in the private sector. These rates are thought to have been stable for around a decade.

Industrial action

Alongside more 'traditional' strikes held in the transport sector (FR0402103N, FR0404103N and FR0410102N) and education (FR0406103N), in the spring of 2004 France witnessed a set of disputes related to government plans for sickness insurance (FR0406105F), and another among researchers from universities and state research organisations (FR0407103F). Workers in the latter dispute went on strike for several weeks to demand extra funding and job security for younger researchers in particular. This strike lasted several weeks and was also noteworthy for the sympathy that it evoked among the wider population. The researchers, organised both within and without unions, made a strong argument for their role in the future of the country and in the creation of jobs, and were able to win over the media. The government appeared taken aback by the strike’s popularity. The election results in this period (regional elections) compounded with this dispute to complicate the government’s task. A number of financial measures were finally conceded to the strikers.

The available statistics on strikes are increasingly questionable (a point raised primarily by the organisations that produce them). Apparently, the figures underestimate quite frequent sporadic, brief and local strikes, and overemphasise the more traditional disputes occurring in large companies. The degree of 'micro-level' disputes may well be quite high, but these are unnoticed by central government observation and are not recorded in the statistics.

A recurring debate concerns whether or not to devise a law regulating strikes in the public services more strictly (FR0409105F), in order to ensure that service is maintained. Ultimately, it was decided not to pass legislation, but to facilitate so-called 'method agreements' in the relevant companies, setting out a framework for managing industrial action. At the French National Railways (Société nationale des chemins de fer français, SNCF), an agreement of this type was signed in October 2004 by the majority of unions (FR0412101N).

Employee participation

There was no change in the procedures for informing and consulting employees in 2004. A report published by the Institute of Economic and Social Research (Institut de Recherches Economiques et Sociales, IRES) on this topic finds that although the legal form is often complied with, such social dialogue has had little effect ('Des institutions et des acteurs, pour quelles politiques sociales, post-enquête Réponse'[Institutions and Actors: what social policy should be adopted after the Réponse survey?], Christian Dufour and Adelheid Hege, IRES, report for DARES, Ministry of Labour, April 2004). The European Company Statute is not referred to in public debate and European Works Councils are scarcely discussed.

Absence from work

Absence from work is difficult to define. Annual company industrial relations reports have been stressing this issues for over 20 years, to little avail. The financial deficit of healthcare systems has entailed debates on these issues. More systematic checking procedures have been called for, and should comply with the new law on the health system (see above). Experts on these questions have argued that absence is often due to the pressure placed on individual workers. However, rising levels of stress, the intensification of work and the mental burden that it creates are always difficult to measure. Crticics claim that absence, and through it the health system, have become palliatives for the mismanagement of these issues, which are not the subject of collective bargaining.

Psychological harassment

Legislation on psychological harassment brought in during 2002 has slowly assumed its place in French labour law. Yet this theme still occupies a very marginal position in France, while the question of stress and its effects is raised more frequently.

New forms of work

Recent debate has focused more on the legal forms of employment contract than specific forms of work. The appropriateness of the various forms of contract - open-ended or not, or flexibility between unemployment and employment (FR0402108F) - and pressures linked to international competition have polarised most discussions of this issue.

Other relevant developments

Thirty years of unemployment and company restructuring have radically tilted the social balance, and left behind a growing section of the population, now facing poverty (FR0403105F). A law introduced in June 200, aims to bring about greater social cohesion, especially by reorganising the ways people can access work, housing and welfare in general (FR0409104F). However, scepticism has already been expressed in some quarters about a plan which, in this period of financial austerity, has benefited from funding transfers rather than extra funding. .

Outlook

Apart from the referendum on the European Union Constitutional Treaty, there are no elections planned for 2005 or 2006. 2007 will be the next election year. The government might use the period until then either to regain its popularity or carry out further the structural reforms under way.

Ongoing bargaining on civil servants’ pay seems to indicate that wages and purchasing power will again feature high on the agenda of both the government and employees in 2005. It remains to be seen how the deep-seated, ever-widening inequalities in France (including the 'working poor' and various forms of exclusion) influence the policies of the social partners. Both employers and unions are reassessing their respective roles. (Christian Dufour, IRES)