1999 Annual Review for FRANCE

This record reviews 1999's main developments in industrial relations in FRANCE

Economic developments

GDP growth in 1999 stood at 2.8%, according to the latest estimates from the National Institute for Statistics and Economic Studies, (Institut national de la statistique et des études économiques, INSEE), compared with 3.2% in 1998 and 2.0% in 1997. Inflation was estimated at 0.9% in 1999 by INSEE, a slight rise after the rate had fallen from 2.0% in 1996 to 0.7% in 1998. Forecasts put the 1999 budget deficit at 2.7% of GDP, down from 3% in 1998. They also estimate that the overall central and local government deficit was brought down from 2.7% of GDP in 1998 to 2.2% in 1999 (continuing the decline since the 6.0% recorded in 1993), putting it below the ceiling imposed by the Maastricht Treaty.

In 1999, 420,000 new jobs were created - up from 375,000 in 1998 - of which 320,000 were in the commerce sector. According to the ILO calculation method, the French seasonally-adjusted jobless figure was 2,797,000 as of 31 November 1999. This translates into an unemployment rate of 10.8%, down from 11.8% in 1998 and 12.6% in 1997 (the high-point of the 1990s).

Since the summer of 1999, job creation has been led mainly by temporary work through employment agencies. The increase in this type of employment levelled off between November 1998 and August 1999 due to a downturn in industrial activity, but rose from September 1999 and recorded an annual growth rate of 13.8% in October of that year. In the private service sector alone, temporary work through employment agencies accounted for a quarter of all new jobs created.

According to INSEE, government job-creation measures in the private sector, in particular cuts in social security contributions within the framework of the reduction of the working week, had a greater impact on jobs in 1999 than in 1998. In 1999 it accounted for 0.6% of all jobs in for-profit sectors – approximately 80,000 jobs – compared with 0.3% in 1998.

In the not-for-profit sectors, the youth employment programme (FR9709163F) also contributed to cutting unemployment rates among young people. In late November 1999, 220,550 youth jobs had been created, of which 75,000 were in the national education system, 16,550 in the police force and 129,000 in associations, regional and local authorities and public institutions.

Political developments

For France, 1999 was a period of continuing "cohabitation"" between Lionel Jospin's left-wing coalition government of Socialist, Communist and Ecologist ministers and Jacques Chirac, the right-wing President of the Republic. Prime Minister Jospin's government came into office in June 1997 following an early general election."

No national elections were held in 1999. However, the landscape on the right of the political spectrum was changed slightly by the European Parliament elections which were held on 13 June. This was due to the appearance of a "sovereignist" movement opposed to the Maastricht and Amsterdam treaties, the Rally of the French People (lRassemblement du peuple français, RPF) headed by Charles Pasqua, a Gaullist, and by Philippe de Villiers, a former centre-right leader. These shifts in right-wing politics were also due to a drop in support for the National Front (Front National), because of a split in the party.

On the left of the political spectrum, the Ecologists (Verts) made gains in the election, scoring 9.7%, which put them ahead of the Communist Party (Parti Communiste) with 6.8%. The Socialist Party (Parti Socialiste) garnered almost 22% of the electorate's support.

Collective bargaining

At the national intersectoral level, there was an almost complete absence of negotiation and agreements between employers' organisations and trade unions in 1999. Since the October 1997 tripartite conference on pay, employment and working time (FR9710169F) - at which the government's proposed legislation introducing a statutory 35-hour working week was announced - the main employers' confederation, the Movement of French Enterprises (Mouvement des entreprises de France, MEDEF), had decided to freeze all intersectoral collective bargaining in protest at the legislation. The sole exception was the renewal in 1999 of the agreement on the "mandating" by trade unions of employees to sign company collective agreements in the absence of union representatives (FR9904177N). This agreement was signed by MEDEF and three union confederations - the French Democratic Confederation of Labour (Confédération française démocratique du travail, CFDT), 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) and the French Christian Workers' Confederation (Confédération française des travailleurs chrétiens, CFTC).

Official data concerning sector and company-level bargaining in 1999 will be available only in June 2000, when the government presents its annual assessment of bargaining (FR9907198F). However, it is likely that, as in 1998, the issue of the reduction of working time will prove to have dominated most negotiations.

At sector level, one of the main developments in 1999 was the long-running debate over the renewal of the banking sector agreement. In February 1998, the Association of French Banks (Association Française des Banques, AFB), in protest at the 35-hour week legislation and in an attempt to reform the sector's pay and bargaining systems, decided to give notice to terminate the collective agreement covering 230,000 employees (FR9802194F). The agreement was thus due to expire on 1 January 2000, and a new agreement had to be reached by that date, if the sector was not to be deprived of bargaining coverage (FR9907102N). Eventually, following lengthy and difficult negotiations and major industrial action, a new agreement was signed in January 2000 (FR0001133F).

Pay

Although official data on the outcomes of bargaining in 1999 are not available in early 2000, figures from the ACEMO survey indicate that basic monthly pay for all employees increased by 1.6% up to the fourth quarter of 1999. A few sectoral agreements illustrate wage developments in 1999: the 1999 metalworking sectoral agreement for the Seine Maritime (Rouen-Dieppe) départementprovided for an increase of 2.3%; and the agreement for local government provided for an increase of 1.3% in 1999. Overall, 1999 was marked by pay moderation, as a variety of agreements were concluded which traded lower increases or pay freezes for job security or job creation, within the context of the government incentives for the introduction of the 35-hour week (see next point).

Working time

Collective bargaining in France was particularly marked in 1999 by the implementation of the first law on the reduction of working time, which therefore merits special review.

The law on "guidelines and incentives relating to the reduction of working time", the first "Aubry law", was issued on 13 June 1998 (FR9806113F). This legislation was in force until the end of 1999, and was designed to encourage bargaining on reduced working time before the adoption of definitive legislation on the 35-hour week, the second "Aubry law", which was passed on 15 December 1999 (FR0001137F). The first law provided for:

• lowering the statutory working week from 39 hours to 35 hours on 1 January 2000 for companies with a workforce of over 20, and on 1 January 2002 for all other companies. The statutory length of the working week determines the threshold above which the legal provisions on overtime apply;

• urging employers' organisations and unions to use this period to negotiate the terms of an effective reduction in working time at sector and company level; and

• offering state financial incentives to companies which negotiated agreements - before the statutory implementation dates - to reduce working time by a minimum of 10%, while creating or maintaining at least 6% of jobs.

The legislation thus offered a two-pronged incentive to negotiations on reducing working time. The Ministry for Employment and Solidarity has published a review of the agreements concluded since the adoption of the first law, up until November 1999.

As of 24 November 1999, 18,174 companies had reached an agreement on the reduction of working time, up from 1,306 in December 1998. These agreements covered a total of 2,418,294 workers. This total can be broken down into:

• 17,568 agreements, covering 1,223,366 employees, in companies taking advantage of the financial incentives for working time reduction;

• 600 agreements, covering 597,788 employees, in companies eligible for, but not taking up, the incentives available; and

• six agreements, covering 597,139 employees, in state-owned companies and institutions not eligible for the incentives.

The dominant features of these agreements are that:

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

• work is being significantly reorganised, through shiftworking, flexible working hours, and longer equipment-operation and service-provision hours; and

• pay has not been cut, but a commitment has been made to freeze pay or moderate pay demands, very often for a period of three or four quarters.

A total of 117 sector-level agreements on the reduction of working time were agreed by November 1999. They reflect unprecedented levels of sector-level bargaining on the reduction and reorganisation of working time. The agreements cover more than 9 million employees, of whom 6.7 million are covered by 94 sector-level agreements that have already been extended to cover whole sectors. A core characteristic of the sectoral agreements is the formal link established between the reduction and the reorganisation of working time by combining various approaches such as flexitime working, caps on overtime, individual "time banks", additional rest days and part-time working.

In the civil service, discussions on the implementation of the 35-hour week started between the Minister for the Civil Service and the unions in 1999, but no agreement was reached. These discussions draw on the conclusions of the Roché report on civil servants' working time, published in February 1999 (FR9903166F)

Equal opportunities

Once again, official data on the outcomes of bargaining in 1999 are not available in early 2000. However, the year saw a number of developments in the field of equal opportunities. Notably, in May 1998, the social partners and government endorsed a joint declaration on racial discrimination, which reasserts and advocates the effective implementation of the principles of equality, non-discrimination and secularism. The government announced a set of proposed measures related to: gaining a better understanding and knowledge of discriminatory practices; mobilising and reinforcing the training of all public and private sector actors on fighting discrimination; developing a "mentoring" scheme for young people during their first steps to employment; making the fight against discrimination part of contracts signed between individual cities and the state; and putting forward legislative amendments to make the fight against racial discrimination more effective. On this last point, possible amendments include: the possibility for trade unions to bring cases of discrimination to the courts; amendments to the rules concerning burden of proof; setting up an "early warning" and referral system which would give workforce delegates the right to sound the alarm when a case of racial discrimination is identified in the workplace; the possibility for labour inspectors to impose sanctions in the case of racial discrimination offences in the workplace; and raising the profile of fighting discrimination through collective bargaining.

Beyond the immediate sphere of bargaining, September 1999 saw the publication of a report on equality between women and men at work, commissioned by the government (FR9909108N). Some 30 legal changes are proposed, including: using the 35-hour legislation (see previous point) as an incentive for equality in the workplace, especially through more stringent regulation of part-time working, where women are in the majority; improving equality of access to continuing vocational training; increasing female representation in trade unions; improving employment opportunities; increasing career choices for women by improving vocational guidance at school; developing childcare systems; and reviewing parental leave allowances.

Job security

The issue of job security is very much bound up with the introduction of the 35-hour week in France. As the aim of the working time legislation is to promote employment, either by means of safeguarding or creating jobs, job security in the form of guaranteed safeguards formed part of a large number of agreements concluded in 1999. According to figures issued by the Ministry of Labour, by the end of June 1999 a total of 7,973 relevant agreements, covering 1,713,350 workers, had been concluded, either creating or safeguarding 85,708 jobs.

Training and skills development

Once again, official data on the outcomes of bargaining in 1999 are not available in early 2000. However, there were a number of training initiatives with bargaining relevance during the year. A government white paper issued in March proposed the creation of an individual entitlement to training, which would be "portable" and safeguarded by collective agreements, and the certification and validation of vocational experience and knowledge (FR9904172F). The proposals, which were broadly welcomed by the social partners, form part of a phased reform process, with much emphasis on dialogue and negotiation with the social partners.

Legislative developments

Most legislative activity regarding industrial relations was concentrated on the second 35-hour week law in 1999. This law was adopted on first reading in the National Assembly on 19 October 1999 (FR9910197N), and then on second reading on 15 December, after Senate amendments to the bill had been rejected by MPs in the Assembly. This legislation came into force on 1 February 2000 (FR0001137F), after review by the Constitutional Council at the request of the opposition parties.

On 30 June 1999, legislation setting in place universal health insurance was adopted definitively (FR9902153F). This law came into force on 1 January 2000 (FR0001135F) and allows people with very low incomes to receive free healthcare.

A new law on the funding of social protection was passed on 2 December 1999. This legislation sets up a new "fund for financing reform of employers' social security contributions" (Fonds de financement de la réforme des cotisations patronales liée aux 35 heures), which will help fund the financial incentives linked to the 35-hour week law (FR9910112F). This law was endorsed by the Constitutional Council in its entirety, with the exception of three minor provisions.

The parliamentary agenda is likely to be heavy up until 2002. On 27 September 1999, the Prime Minister unveiled his government's agenda for the remainder of the current parliament to Socialist MPs. Much of this agenda is taken up with social issues, such as addressing unjustified redundancies, limiting precarious employment, reforming vocational training, tabling legislation on "new economic regulations", and extending the financial participation of employees in companies.

The organisation and role of the social partners

1999 saw many changes in this area. On the trade union side, the year was marked by progress in putting into place joint initiatives between some unions, and in particular the strengthening of ties between CFDT and the General Confederation of Labour (Confédération générale du travail, CGT) (FR9902154F). This was reflected in the organisation of a joint 1 May demonstration called by all unions, with the exception of the General Confederation of Labour-Force ouvrière (Confédération générale du travail - Force ouvrière, CGT-FO), and in the numerous joint positions adopted during the drafting of the 35-hour week Act - especially the CFDT, CFTC, CGT, CGT-FO joint statement on the 35-hour week for managerial and professional staff (FR9904176N). However, no assumptions should necessarily be made, as union alliances fluctuate according to the issue at hand. In 1999, two French union organisations were admitted to the European Trade Union Confederation (ETUC): CGT on 16 February (FR9903167N) and the National Union of Independent Unions (Union nationale des syndicats autonomes, UNSA) on 20 May (FR9905186N).

On the employers' side, MEDEF further developed the strategy which led to its creation in 1998 from the former CNPF confederation, ie the rejection of both the 35-hour week (FR9909109N) and state encroachment in social partner jurisdictions. Throughout 1999, MEDEF continually threatened to pull out of jointly-managed social protection agencies. It was for this reason that MEDEF was not prepared for most of the year to renegotiate the agreements on the UNEDIC unemployment insurance fund, or theARPE agreement - which allows workers with 40 years' pension contributions to take early retirement and be replaced with equivalent numbers of new workers. However, in December 1999 the provisions of both accords were extended for six months by the employers and unions, with the exception of CGT. Meanwhile, MEDEF acted on its criticism of government encroachment, by proposing a union-employer partnership to draw up a "new social constitution", overhauling the French system of industrial relations (FR9912122F). This idea was debated bilaterally with all the unions. In this context, in his New Year address to the unions and employers, President Jacques Chirac stated that he was open to constitutional amendments in order to promote social dialogue.

Industrial action

Industrial action in 1999 can be broken down into the following three categories:

• action linked to the negotiations on the reduction of working time - as in the public sector, retail, oil and computers (FR9912125F) - or the renewal of the banking sector agreement. This constituted the majority of industrial action in 1999;

• industrial action over workforce reductions, of which there were two striking examples. A successful strike at the Elf Exploitation Production petrochemicals company was supported by the local population as well as by local politicians (FR9908104N), while Michelin's announcement of job cuts provoked substantial (if fragmented) reaction in France from both politicians and unions (FR9910113F) and gave rise to major action and discussions throughout the EU (EU9911210N); and

• a number of safety-related disputes in the public urban transport sector, following a series of attacks on drivers and ticket collectors.

National Action Plan (NAP) for employment

France's 1999 National Action Plan (NAP) for employment was unveiled to the social partners on 19 May 1999, within the framework of the Committee for Social Dialogue on European and International Issues (Comité du dialogue social pour les questions européennes et internationales) (FR9906189F). Unlike the previous year, the social partners felt that they were better informed and more widely involved in 1999, following the creation of the Committee and the setting up of internal informal working groups in late 1998 (FR9812149N). However, short timescales still prevented the various bodies represented on the Committee from providing detailed input.

The following three points should be highlighted:

• a divergence of opinion exists between the various unions as to the appropriate degree of participation by the social partners in the discussions on, or implementation of, the NAP;

• the beginnings of trade union cooperation on European issues was highlighted by a joint statement to the Committee on the NAP from four union confederations (CFTC, CFDT, CFE-CGC and CGT); and

• the low level of articulation between the positions of European trade union bodies and employers' associations and those of their French affiliates.

The impact of EMU on collective bargaining and industrial relations

Although trade union and employers' leaders are concentrating their debates on the impact of EMU on collective bargaining and industrial relations, it is as yet difficult to identify any tangible impact the single European currency has had on labour relations in France in 1999.

So far, it is is first and foremost the European employment strategy launched at the November 1997 jobs summit in Luxembourg (EU9711168F) that has had a direct impact on employment policy in France, though the NAP (see previous section). Europe-wide agreements between the social partners and EU Directives are important in principle, since they constitute a new source of law. However, given their limited content, they have, with the exception of the establishment of European Works Councils, had only a minor impact on national legislation in France.

Employee representation

The debate on trade union representativeness was revived during preliminary discussions on the second 35-hour week law. This law states that company-level 35-hour week agreements must be signed by the majority unions or approved by a majority of staff if they are to be eligible for state financial assistance. The law is not designed to amend current rules governing union representativeness but rather to identify ways of legitimising company-level agreements (FR9909104F).

However, some unions, such as CGT or UNSA, are taking this issue a step further and want to overhaul the current criteria governing representativeness. Those union organisations deemed representative at national level - CFDT, CFE-CGC, CFTC, CGT, CGT-FO - are unquestionably presumed so at all levels, and can thus negotiate sector-level and company collective agreements and appoint union delegates within companies. In addition, they have the monopoly right to nominate candidates in the first round of workplace elections of employee representatives (eg on works councils). Other union organisations are required to prove their representativeness in each sector or each company to acquire these rights.

Another important feature of the regulations governing union representativeness is the "single signature" rule which applies in collective bargaining. This enables one representative union to sign an agreement on behalf of the entire workforce of a company or sector. In 1982, an attempt was made to limit the negative impact of collective agreements signed by unions deemed representative but with minority status in the sector or company in question. As a result, those representative unions which obtained a majority in the most recent workplace elections were awarded the right, in some cases, to oppose an agreement they had not signed.

CFDT does not oppose the overhaul of the rules governing representativeness as a matter of principle, but it criticised the government for dealing with such an important issue without first consulting the social partners, and for having done so on the occasion of the passage of a law which was originally designed for a totally different purpose. The other unions – CGT-FO, CFE-CGC and CFTC – are opposed to any challenge to the criteria governing representative status.

It is a moot point as to whether this issue will be raised again in 2000, given that the 35-hour week law does nothing more than set the conditions for concluding company-level agreements on working time. However, commentators predict that this challenge to the traditional rules governing representativeness, as well as MEDEF's resolve to develop a "new social constitution" for France (see above under "The organisation and role of the social partners"), could reopen the debate.

New forms of work

Non-standard types of employment have been an issue in France, as in the rest of Europe, for the past few years and this type of work now accounts for a fairly high percentage of all jobs in France. The number of fixed-term employment contracts has increased by over 40% in the past four years, while the level of part-time working, which was static in 1999, now represents over 17% of all salaried jobs.

The government has attempted to address "atypical" employment in two ways:

• introducing the 35-hour week law, in so far as it promotes a reorganisation of working time and fosters an alternative type of work organisation. It is designed, among other aims, to substitute internal flexibility for external flexibility; and

• encouraging part-time work through financial incentives which have been available since 1992. Under this scheme, employers' social security contributions are reduced by 30% for employees who work on a part-time basis. This relief will be phased out no later than one year after the implementation of the statutory 35-hour week, ie in February 2001 for companies employing a workforce of over 20. However, this reduction in employer contributions will continue to apply to employment contracts which were signed before 1 February 2001 and to contracts which were eligible for employers' contribution reductions at the time of the introduction by the company of reduced working time.

In addition, Prime Minister Lionel Jospin has announced his intention to make addressing precarious employment a priority in the second half of his term of office.

Outlook

Negotiations on the implementation of the first 35-hour week law dominated the industrial relations agenda in 1999, while the drafting of the second 35-hour week law was a major issue in both political and industrial relations terms. The year 2000 promises to be very important for the following two reasons:

• the definitive statutory 35-hour working week will be implemented for the first time in 2000. It will be interesting to see to just what extent this provision will create employment, and whether the current intensity in negotiations between the social partners will continue after implementation of this law; and

• debate on social protection, and particularly on pensions, is about to enter a crucial phase, with many experts predicting a crisis in the pension system. The government will have to make decisions on a possible increase in the retirement age, and on the setting up of a third pillar of welfare in addition to the current general and complementary systems. These decisions will undoubtedly give rise to much debate, position-taking and mobilisation.

The industrial relations system is currently experiencing potential change. A decision is still awaited from MEDEF as to whether it will pull out of jointly-managed social security and unemployment insurance agencies. If it does indeed decide to withdraw, the whole balance will be challenged and this could have a destabilising effect on the unions, whose institutional culture has developed, to a great extent, around these bodies. The decision rests on the outcome of a set of negotiations during 2000, decided on by central employers' organisations and union confederations at a meeting on 3 February 2000 (FR0002143F). The talks, which could potentially involve a major overhaul of French industrial relations, will cover: the development of social dialogue; unemployment insurance, the struggle against precarious employment and young people's access to the labour market; reform of the workplace health system and changes to the employment-related accident insurance system; the development of supplementary pensions schemes; reform of vocational training; equality at the workplace; the position and role of managerial and professional staff; and social protection.

MEDEF's "new social constitution" project, as well as the trade union representativeness issue, will thus undoubtedly be the main driving force in debate between employers, unions and the government in 2000.