Bill issued on wages, working time and job creation

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After meeting with social partner representatives over the summer, François Fillon, France's Minister for Social Affairs, Labour and Solidarity, presented a bill to the cabinet on 18 September 2002. The bill covers 'wages, working time and job creation' and is to be debated in parliament from October onwards. The proposed new law would lay down a structure for the harmonisation of the various levels of the SMIC minimum wage by July 2005, introduce flexibility into the 35-hour week by increasing the annual overtime quota, and overhaul the system of reductions in employers’ social security contributions.

François Fillon, the Minister for Social Affairs, Labour and Solidarity in the new conservative government, held a series of meeting with representatives of the social partners over late August and early September 2002. He met: the French Christian Workers' Confederation (Confédération française des travailleurs chrétiens, CFTC), the General Confederation of Labour (Confédération générale du travail, CGT) and the General Confederation of Labour-Force ouvrière (Confédération générale du travail-Force ouvrière, CGT-FO) on 27 August; 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 Craftwork Employers' Association (Union professionnelle artisanale, UPA) on 28 August; the General Confederation of Small and Medium-sized Enterprises (Confédération générale des petites et moyennes entreprises, CGPME) and the National Union of the Liberal Professions (Union nationale des professions libérales, UNAPL) on 29 August; and lastly the Movement of French Enterprises (Mouvement des entreprises de France, MEDEF) on 2 September.

By holding these numerous meetings, the Minister hoped to get a more precise idea of the stances of the various organisations on the issues at the top of the government's agenda (FR0208103F) at the end of the holiday period - such as the harmonisation of the various levels of the SMIC national minimum wage (FR0208102F), the introduction of flexibility in the statutory 35-hour working week (FR0001137F), the reduction of employers’ social security contributions, wage claims and amendments to the previous government's 'social modernisation' law (FR0201102F).

Finally, the Minister called a meeting of the tripartite National Collective Bargaining Commission (Commission nationale de la négociation collective) on 6 September 2002, in order to present a bill on various employment-related matters to its members. He then submitted the bill to the cabinet on 18 September.

The new bill

The bill on 'wages, working time and job creation' is aimed at: introducing flexibility into the legislation on the 35-hour week; harmonising the various levels of the SMIC and of the 'guaranteed monthly wage' (garantie mensuelle de rémunération, GMR) created in recent years as a result of the application of the 35-hour week legislation; and implementing a new system of reducing employers’ social security contributions.

SMIC

In terms of the minimum wage, there will be no more GMR rates set, ending an annual practice - the last one will be that set in July 2002 (FR0207105F). The GMR was established to guarantee that people paid at the rate of SMIC, whose employers had switched to the 35-hour week, would receive pay equivalent to that received by those who were still working a 39-hour week (ie to prevent the wages of these workers falling on a pro rata basis as statutory weekly hours were cut, by having their weekly pay fall from 39 times the hourly SMIC rate to 35 times this amount). A number of different GMR rates have arisen, depending on when workers switched to the 35-hour week.

The various other existing GMR rates will now be the subject of differential annual rises so that they converge, on 1 July 2005, with the GMR rate set in July 2002 (plus index-linked increases in this rate over the 2002-5 period). The hourly SMIC rate will also be increased annually so that on 1 July 2005 it will provide a monthly income equivalent to the harmonised monthly SMIC, which will result in the hourly rate of SMIC being raised by an estimated 11.4% by 2005.

Social security contribution reductions

As for the reduction of employers’ social security contributions, the government is proposing to amalgamate the various existing schemes into a single provision. This means giving companies a single reduction in employers’ contributions (for social security, work-related accidents and family allowances) applicable to the lowest wages. This reduction, to be implemented as of 1 July 2003, will apply on a sliding scale to all wages between the SMIC level and 1.7 times the SMIC (ie the reductions will be highest for the lowest pay rate and fall progressively as wages rise). The cost to the public purse of this measure will be EUR 6 billion between now and 2006.

For the government, this measure’s objectives are to: stimulate employment by lowering labour costs for the lowest-skilled employees; enable companies successfully to negotiate the end of the multiple-SMIC era; and help small and medium-sized enterprises (SMEs) and crafts firms to adjust to the 35-hour week.

35-hour week

The statutory 35-hour week will officially be maintained. However, new flexibility will be introduced in the overtime scheme.

The annual overtime quota, determining the maximum threshold above which every extra hour worked grants entitlement to time off in lieu, will in future be set by sector-level collective bargaining. In the meantime, in those sectors not covered by an agreement in this area, a government decree will set the principle of a single annual overtime quota of 180 hours per worker, regardless of the size of company (this quota currently stands at 130 hours for firms with more than 20 employees and 180 for those with 20 or fewer workers).

Pay premia for overtime working are also to be referred to sector-level collective bargaining, with a minimum of 10% over the normal rate. If there is no agreement, the statutory rates will continue to apply.

The new government’s declared objective in introducing flexibility into the 35-hour week is to 'return work to centre stage', as it is considered as a 'pillar of society' and a measure of progress, and also 'to encourage a process of, let’s not be afraid to say it, political and cultural rebalancing, between legislation and regulation on one side, and collectively agreed norms' (in the words of François Fillon to the National Collective Bargaining Commission on 6 September 2002).

Initial responses

Initial responses to the bill from unions and employers’ associations have been varied and will probably continue to be so throughout the debates on the proposals in both houses of parliament - debate is due to start on 2 October 2002.

MEDEF has announced its reservations about the way in which the harmonisation of the levels of the SMIC will be carried out, and its president, Ernest-Antoine Seillière, has stated that he is concerned by the direction taken by the government on the question of working time. However, the reduction in employers’ social security contributions is seen in a positive light. UPA appears satisfied with the government’s proposals on the SMIC, working time and the reduction in employers’ contributions - its president, Robert Buguet, especially welcomes the plan to leave it to sector-level negotiations to decide the details of the necessary flexibility to be introduced into working time. CGPME, through its acting president, Jacques Roubaud (FR0207101N), welcomed the government’s willingness to help SMEs, but expressed regret over the choice of using a regulatory instrument (a decree) to set the overtime quota (180 hours per year) and feared that the burden of harmonising the SMIC would be borne by business.

On the trade union side, CGT has been highly critical of the government’s bill, seeing it as imbued primarily with the 'bosses’ philosophy', and has stated its readiness to mobilise its members in opposition. CFTC has already emerged as a stern critic of the bill, feeling that the public money involved is going disproportionately to business, and has suggested that the reductions in social security contributions should also apply to employees. CGT-FO wants the debate on wages to be reopened, particularly in relation to the issue of the minima set by sector-level agreements. It has stated its willingness to mobilise around this issue if the government is not more proactive on it. CFE-CGC has greeted the approach to dealing with the harmonisation of the various SMIC rates. In relation to working time, this union confederation agrees in principle that discussions about particular measures connected to the introduction of flexibility into the 35-hour week should take place at sector level, but disagrees strongly with the draft decree raising the annual overtime quota to 180 hours and is apprehensive about proposed amendments to the working time reduction scheme for managerial staff whose working time is counted in days rather than hours. Similarly, CFDT also approves of the methods to be used for harmonising the various levels of SMIC, but is anxious about the reduction of working time being counteracted by an increase in the annual overtime quota and the possible lowering of the rate at which overtime is paid.

Commentary

The government’s bill on wages, working time and job creation introduces a miscellany of provisions, which pleases some and annoys others, while deferring much of its implementation to sector-level collective bargaining. In following this path, the government is attempting to take at their word the trade unions and employers’ associations that expressed regret about, or even criticised, the weakness of social dialogue and collective bargaining under the previous administration. At the same time it risks – albeit still marginally – fuelling the discontent and 'bad mood' of these organisations, which may be tempted into raising the stakes strategically as important elections - the December 2002 elections of representatives on industrial tribunal s (Conseils de Prud'hommes) - approach. (Maurice Braud, IRES)

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