France: New fund for social partners to enhance transparency

A new fund has been set up by the French government to support trade unions and employer organisations in managing their bipartite bodies and to help them contribute to public policy. Parliament has passed legislation to create the fund and put in place rules to ensure the transparency of funding sources and the allocation of monies.

Background

Parliament had three objectives when setting up the new fund to support the social democracy work of employer and trade union organisations (in French):

• transparency about the origin of funding and allocation rules;
• avoiding any conflict of interests between funding the organisations and public policies that justify such financing;
• covering the cost of general interest missions carried out by the social partners.

The law of 5 March 2014 established for the fund to come into force from 1 January 2015. It stipulated that the fund would be established by a collective agreement or, failing that, by decree. As trade unions and employer organisations failed to negotiate an agreement, two decrees were then published to implement the law: Decree No 2014-1718 (in French); and Decree No 2015-87 (in French).

Before the reform, the social partners had three sources of funding:

• subsidies from bipartite bodies (particularly those in charge of management of vocational training funds);
• a €23 million annual government subsidy (used, for example, to train trade unionists);
• their own resources, including membership fees.

Funding of trade unions and employer organisations

Under the new rules, the fund gets a state subsidy plus a contribution from employers, set at 0.016% of the payroll and deducted from each employee’s wages. This contribution, set up by Decree of 30 December 2014, covers all private employers, including those not belonging to an employer organisation or who have no trade union representation in their establishment. Public companies must also pay for employees that they employ under private law. The state subsidy (€32.6 million in 2015) is provided for by the Finance Act. According to the Labour Code, any financing from jointly managed bodies is prohibited (in French).

Distribution rules clarified

The fund is allocated in three ways.

1. One share, estimated at €73 million, is contributed by the employers. This finances bipartite bodies made up of employer and worker representatives that have a role in developing policies. It is shared evenly between the representative trade unions and employer organisations (whose representativeness will be assessed from 2017 onwards).
2. The second share, funded by the state, is paid as a flat rate to national interprofessional organisations, multi-professional organisations and organisations that represent more than 3% of the votes  (for example, the union confederation UNSA) for their participation in developing, implementing and monitoring public policies.
3. The third share is for economic, social and union training, and is funded by businesses and public subsidy. It is distributed on the basis of the share of votes won by organisations in the 2013 workplace representation elections. A share can be claimed by national interprofessional organisations and organisations entitled to be national and intersectoral representatives that received more than 3% of the vote in 2013.

Functioning of the funds

The fund is managed by a bipartite board of directors composed of two regular representatives and two alternating representatives for each of the representative trade unions and employer organisations at national and intersectoral level. Unions have a total of ten members and ten alternating members and employers have six members and six alternating members for the employer organisations. The posts of president and vice-president (which can be held for a maximum of two years) are filled alternately by members of the trade union and employer organisations. A government commissioner also sits on the board.

Functioning of the board

The board can make decisions by consensus or by majority vote. Any decision to suspend or reduce funding to an organisation must be made by a two-thirds majority. The total votes of the unions are equal to the total votes of employer organisations. Each union has two votes and each employer organisation has a number of votes proportionate to their number of members at national and intersectoral level. However, for a transitional period, each employer organisation has a number of votes equal to the number of seats it holds in the National Joint Interprofessional Council for Employment and Training (COPANEF): six for the Movement of French Enterprises (MEDEF), three for the General Confederation of Small and Medium Enterprises (CGPME) and one for the Craftwork Employers’ Association (UPA). 

Transparency of accounts

The decree also obliges works councils to keep annual financial accounts to increase transparency about how they are managed.

Commentary

Some points about the decree still need to be clarified, especially regarding the payment of wages for employees who go on economic, social and union training. Trade unions want a subrogation system to avoid a break in the payment of wages and contributions which will oblige the employer to carry on paying an employee while they are being trained and apply for compensation from the fund.

Only employer federation MEDEF has criticised the decrees, saying that the employers’ subsidy should have been fixed at 0.014% instead of 0.0016%.

The reforms come in response to criticism that trade unions and employer organisations were partly funded by the bipartite bodies they manage (in French, 2.36MB PDF) and therefore the changes strengthen their legitimacy and guarantee stable funding. Overall, the change is one that introduces transparency, as each organisation will send an annual report to Parliament. The social partners will not be any richer, but their funding will be plain to all and clearly established (in French).