1998 Annual Review for France

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This record reviews 1998's main developments in industrial relations in France

Introduction

Economic conditions in 1998 were favourable. However, these began to deteriorate in the fourth quarter under the impact of the global financial crisis. According to the latest estimates from the National Institute of Statistics and Economic Studies (Institut National de la Statistique et des Etudes Economiques, INSEE), GDP grew by 3.1% in 1998, the rate of inflation stood at 0.7%, and the budget deficit was reduced to around FRF 250 billion. The total public spending deficit is below the maximum fixed by the Treaty of Maastricht.

The number of jobs increased by 390,000 ( 1.7%), of which 290,000 were in market sector. The number of unemployed people, by the ILO definition, corrected for seasonal variations, was 2.96 million at the end of 1998, an unemployment rate of 11.5% compared with the 12.3% recorded for December 1997.

The recovery of the labour market has promoted the growth of non-traditional forms of work, such as part-time and fixed-term contracts, and temporary agency work. The growth within the last-named category was substantial, with the volume of temporary agency work growing by 35% during the first half of 1998, compared with the first half of 1997. Temporary agency work represents the equivalent of 423,000 full-time jobs. The average length of temporary work assignments was 1.8 weeks. The growth in employment should thus be viewed with caution, as it is of a precarious nature.

In 1998, France experienced a "cohabitation" between the conservative President, Jacques Chirac, elected in 1995, and a government led by the socialist Prime Minister, Lionel Jospin, supported by a parliamentary gauche plurielle("plural left") coalition, consisting of socialists, communists, and ecologists, elected in 1997.

Key trends in collective bargaining and industrial action

The issue of working time reduction dominated industrial relations at national level in 1998, and was inextricably linked to collective bargaining, job creation policies and the introduction of new forms of work organisation. As announced during the tripartite conference on employment, pay and working time held in October 1997, a guidelines and incentives law on the reduction of working time (loi d’orientation et d’incitation relative à la réduction du temps de travail) came into effect on 13 June 1998 (FR9806113F). It provided that:

• the length of the statutory working week will be reduced from 39 hours to 35 hours as of 1 January 2000 for companies with more than 20 employees, and as of 1 January 2002 for other businesses (the statutory working week determines the threshold beyond which the legal overtime rules apply);

• between now and the dates mentioned above, employers' organisations and trade unions are encouraged to negotiate on the ways in which the reduction of working time will actually be carried out at sector and company level; and

• companies which, through a collective agreement, reduce working time by at least 10%, while creating or saving at least 6% of jobs, before the deadlines set out in the law, are entitled to state-funded aid.

The law thus provides a double incentive for the social partners to bargain on working time reduction. Moreover, the government has agreed to take the results of these negotiations into account when drafting a second law, due in late 1999, which will establish the details of the new legal system for working time.

An analysis of the collective agreements reached during the first eight months of the law's application identifies a number of significant trends (FR9901151F). After a slow start, the number of company-level agreements signed accelerated from October 1998 onwards, with the total reaching 1,306 by the end of December, and exceeding 2,000 by early February 1999. These agreements cover almost 400,000 employees, while the law applies to approximately 13 million, about 9 million of whom work for companies with more than 20 employees. The key characteristics of the agreements are that:

• the organisation of working time is increasingly being defined on an annual basis;

• the reorganisation of work has been far-reaching, including the use of shiftworking, the extension of the length of use of facilities or of opening hours, and flexibility in working hours; and

• there has been no reduction in wages but a commitment to wage freezes or "moderation", extending most often over 18 months or two years.

The dynamism of sectoral bargaining on working time has surprised observers, given employers' usual preference for decentralised negotiations. Of the 175 main sectors, 90 had begun the negotiating process and 40 had reached agreements by early February 1999. These agreements covered 6.3 million employees.

The content of the agreements varies greatly from case to case. The metalworking industry deal, signed only by some of the minority unions in the sector, has been widely seen as an attempt by the employers to nullify the contents of the law (FR9808129F). By contrast, the agreement in the textiles industry was, very unusually, signed by all the unions (FR9810137N).

One common feature of sectoral agreements is the establishment of a clear link between reduction and reorganisation of working time, by combining various methods - such as varying the length of the working week, imposing maximum levels of overtime, introducing individual "time savings accounts", providing extra days off or increasing the use of part-time working.

The issue of working time complicated bargaining in other areas. The main employers' organisation, the National Council of French Employers (Conseil national du patronat français, CNPF), which was strongly opposed to the 35-hour week legislation, announced its wish to "freeze" the dialogue between employers and unions after the October 1997 tripartite conference. This resulted in a virtual break in negotiations at national intersectoral level. There was one important exception: in late 1998, CNPF (which had now become MEDEF, see below) agreed to negotiate the renewal of a 1995 intersectoral agreement on the early retirement creation scheme (Allocation de remplacement pour l'emploi, ARPE), which was due to expire. A new agreement was subsequently signed by MEDEF and all the trade union confederations in December (FR9901150F). The deal allows employees who have paid pension contributions for 40 years to take early retirement, with an obligation for companies to hire staff to fill an equivalent number of jobs.

Except in connection to the reduction of working hours, sectoral bargaining was generally slow (though statistics are not yet available). In particular, pay negotiations were largely fruitless, as employers wished to maintain a margin for manoeuvre in this area for the negotiations on the reduction of working time and its consequences for pay. Employers in some industries threatened to terminate, or actually terminated, sectoral collective agreements, again in order to increase their margin of negotiation on working time (FR9802194F).

Company-level bargaining was active in 1998, though principally around the working time issue.

With regard to industrial action, since 1996 (FR9801190N) the volume of strike activity has been exceptionally low. This trend continued into 1998, but there is not yet any statistical information available to support this. It is interesting to note, that the government extended its privatisation programme (most notably France Télécom and large banks) without triggering off much industrial action. Where there was industrial action, it was mainly concentrated in the transport sector - airlines (FR9806114F), railways (FR9805110N) and road haulage (FR9809128F).

The spectacular activities of unemployed groups, which got off the ground in December 1997 and January 1998 (FR9801189F) led to an improvement in unemployment benefits and guaranteed minimum social benefits. Another wave of action which began in December 1998 was rapidly defused by government concessions (FR9812148N).

Industrial relations, employment creation and work organisation

As indicated above, the passage of the law on the reduction of working time, and the collective bargaining that it generated were the key features affecting employment creation and work organisation. However, significant measures were taken in three other areas of employment policy:

• the abovementioned agreement on the ARPE "early retirement for jobs" scheme. Although it creates no new jobs, it does guarantee that employment levels are maintained, and promotes the reorganisation of work (as the company is not obliged to recruit replacements for exactly the same jobs);

• the government started to implement an employment scheme for young people. State funding is granted for five years to innovative projects in not-for-profit sectors, which allow unsatisfied social needs to be met. At the end of 1998, 150,000 young people had been taken on under this programme, whose overall objective is to create employment for 350,000 over five years; and

• a law aimed at fighting social exclusion was passed in July 1998 (FR9806116F). It includes a set of measures aimed at fostering the return to work of those groups in the greatest need, such as unqualified young people, long-term unemployed people and people with disabilities.

The body of employment policy measures were adapted or developed to form the National Action Plan on employment, responding to the EU Employment Guidelines (FR9805107F).

A wide-ranging debate opened on the possibility of broadening exemptions for employers from paying social security contributions on low wages, in order to promote job creation to benefit low-skilled workers (FR9809129F). A decision on this matter was postponed until 1999.

Developments in representation and the role of the social partners

The year was marked by three key developments in this area. First, the law on working time has led to far greater flexibility in the use of "mandating" in collective bargaining. This process enables trade unions with no representative in a company to mandate an employee to negotiate a collective agreement in its name (FR9807123F). Despite the marked reluctance of some unions, they have all used mandating to reach agreements on the reduction of working time. This is a major innovation in the rules of collective bargaining.

Second, the European dimension in industrial relations is growing in importance. The creation of European Works Councils (EWC s) has continued. Restructuring and merger operations have sparked off cross-border joint action by unions and workers' representatives within multinationals, as at Renault (FR9803195N) or around the Hoechst/Rhône-Poulenc merger (FR9812146F). Furthermore, the government created a Committee for Social Dialogue on European and International Issues (Comité du dialogue social pour les questions européennes et internationales), which will allow the social partners to be consulted on the social and economic aspects of EU and international matters (FR9812149N).

Third, there were significant developments within employers' organisations and trade unions. The announcement of the law on the reduction of working time in October 1997 brought about the resignation of Jean Gandois, the president of the CNPF employers' organisation, who had been a supporter of active intersectoral bargaining. His successor, Ernest-Antoine Sellière, represents a tendency focused on free market economics and the promotion of business interests. The subsequent transformation of the CNPF into the Movement of French Enterprises (Mouvement des entreprises de France, MEDEF) in October symbolises these new priorities (FR9811140F). The changes affecting trade unions have been equally profound (FR9811139F). They have particularly manifested themselves in the rapprochement of the two largest confederations, the French Democratic Confederation of Labour (Confédération démocratique française du travail, CFDT) and the General Confederation of Labour (Confédération générale du travail, CGT), which will facilitate the latter's admission into the European Trade Union Confederation. Their joint discussions have revolved around the search for a new way in which to combine the union functions of protest, proposal and negotiation.

Industrial relations and the impact of EMU

The consequences of EMU were central to discussions among employers and among unions - for example, they participated in a working group which drew up a report on the impact of the introduction of the euro single currency on various aspects of industrial relations in France (FR9810200F). However, it is difficult to evaluate the practical consequences of this on industrial relations in 1998. As noted above, it was especially the Employment Guidelines arising from the November 1997 "Employment Summit" European Council meeting in Luxembourg that had a direct impact on employment policy. European-level framework agreements and EU Directives have great importance in principle, in that they constitute a new source of law; however, given their limited content, they have had only indirect consequences on national law, apart from the creation of EWCs.

Conclusions and outlook

The new law on working time and the subsequent collective bargaining dominated the year in industrial relations. There were tense conflicts over the strategies of the various protagonists. The announcement of the new law was the opportunity for - or a factor that provoked - a distinct change in employers' strategy. The prospects opened up by the negotiations led to markedly different choices being made by the various unions. Despite their diversity, working time agreements have introduced profound innovations, in terms of both procedures - for example, "mandating" - and content - for example, the reorganisation of work and production. The government justified the law with the aim of creating jobs. The fact that the first wave of agreements were concluded late in the year meant that no noteworthy employment effects were recorded in 1998, but the favourable economic conditions provided an alternative motor of job creation.

In evaluating the efficiency of the reduction of working time in terms of job creation, 1999 will be decisive. Economic conditions will be less favourable, while the government will have to come to a decision on key issues regarding social protection, such as slowing down the increasing cost of sickness insurance, balancing the pensions systems in the long term, and exemptions for employers from paying social security contributions on low wages. It is probably in this field that the main risk of industrial action will lie.

Industrial relations in 1999 will be dominated by the framing of the second law on the move to the 35-hour week, which will have to resolve several key issues: the way overtime is dealt with; the impact on the SMIC statutory minimum wage; and special measures for managerial staff.

Lastly, 1999 will enable an initial evaluation to be made of the impact of EMU on the way in which labour markets work, particularly in terms of the ways in which labour costs are calculated. Unlike neighbouring countries, this matter is currently marginal to social debates in France. (Jacques Freyssinet, IRES)