Government includes social partners in labour market reform talks

On 7 September 2012, Michel Sapin, France’s Minister of Labour, sent the social partners a document setting out the process for negotiating radical changes to the labour market. It outlined key areas for discussion such as the simplification of collective redundancy. The Government hopes the talks will help to introduce more flexibility to France’s rigid labour laws. Negotiators have until the end of the year to reach an agreement that will form the basis of new legislation.

Guidance document issued

The deteriorating employment situation in France has prompted France’s Minister of Labour, Michel Sapin, to bring unions and business leaders together to discuss ways of reforming the country’s labour market.

The Government issued a guidance document as a prelude to the discussions in September 2012, and this was sent to the national representative trade unions and the employers’ associations. Social partners were asked to conclude their negotiations ‘by March 2013 at the latest’, and ‘to the fullest extent possible’ before the end of 2012.

The tight deadline is to a large extent due to the fact that France now has more than three million jobseekers, and unemployment currently stands at over 10%.

The document set out four key areas for the negotiations – measures to counter precarious employment, the anticipation of changes in occupations, improvements to existing measures used during an economic downturn to maintain employment, and collective redundancy procedures

Tackling precarious employment

A weakness of the current French labour market is the polarisation of employment. While permanent employment contracts offer workers relatively high employment security, the use of short-term employment contracts and temporary work, largely affecting young workers, women and migrants, brings a high level of insecurity to these groups of workers.

The government wants the permanent employment contract (CDI) to remain the normal form of employment. However, reforms could include altering the social contribution rates paid by employers for workers on precarious contracts, making them more expensive to hire than permanent employees. The guidance document also suggests measures to improve the rights of part-time workers and to reduce the incidence of involuntary part-time work.

The social partners have already agreed to discuss this issue during talks on quality of life at work (FR1208011I), and will now link the two negotiations.

Finally, for jobseekers whose last job was on a short-term or temporary work contract, the guidance document suggests improved access to professional training and support from the French public employment service.

Anticipating job changes

To improve employability, the government wants to strengthen the existing forward-looking employment and skills management provisions (GPEC). It also wants to improve GPEC’s linkage with training and labour mobility policies. There is also a proposal that GPEC could be extended from company to sectoral and territorial level.

The Minister also requested that the social partners find solutions to improve the sharing of strategic information with employees’ representatives to prevent unexpected business failures.

The social partners will also have to discuss the information and consultation process to ensure that when employers genuinely attempt to follow the rules, there is no risk of them being taken to court by employee representatives who claim not to have been properly informed or consulted. There is a feeling that it is currently too easy for employees to argue that they have not received enough information, or that the employer has already taken its decision before consulting them. Employers argue that they feel anxious when informing and consulting as there is a high risk that they may still be taken to court, even if they comply with the law.

In addition, the Government wants social partners to examine the timing of the information and consultation process and the issue of confidentiality of information. This is the subject of a negotiation the social partners began two years ago. The aim was the modernisation of the information and consultation bodies but a sticking point has been the threshold that obliges employers to organise elections for the various employee representative bodies.

The Government also wants social partners to examine how job mobility can be improved, and how accrued training rights can be transferred from one employer to another when workers move jobs.

Tools for job retention

To avoid redundancies and the subsequent loss of skills in businesses experiencing financial difficulties, the government wants to introduce new mechanisms, and to simplify and strengthen existing ones.

Firstly, the government wants to improve available mechanisms targeting those in short-time work, going further than the agreement signed in January between the social partners (FR1112031I). If necessary, the social partners could combine several mechanisms to provide a more efficient alternative to redundancies and the greater use of training.

Secondly, negotiators could request a legal framework to safeguard company-level agreements in which the employer makes a commitment to retain jobs in return for the workforce agreeing to greater flexibility, a wage freeze, or even a pay cut.

Under current rules, in the rare event of such an agreement, although individual workers have the right to refuse changes to their working conditions, the employer is then obliged to dismiss them because it is not permitted for individuals to opt out of a general agreement.

Simplifying collective redundancies

The government has invited the social partners to improve the collective redundancy process, regularly criticised by employers and some experts as too onerous, expensive and ambiguous. There is also the feeling that the cumbersome process fails to prevent redundancies, is not efficient, and does not help employees get back to work.

The document proposes that third parties – such as labour inspectors, judges, experts, local or regional authorities – should be involved in the redundancy process at the earliest possible point.

The Government has also asked social partners to look at introducing rules which would prevent a company wishing to wind up a business from refusing to consider a valid offer from a buyer, purely on the grounds that the offer came from a competitor, if the offer could secure some degree of employment at the site.

Reaction from the social partners

All social partners have agreed to participate in the negotiations. The main employers’ organisation, the Movement of French Enterprises (Medef) reacted positively, commenting that ‘the negotiation scheme is open’ and it would take into account the desire of businesses for ‘simplification’ and ‘flexibility’ of the system.

The General Confederation of Small and Medium Enterprises (CGPME) said it entered the discussions with ‘a constructive spirit’.

On the trade union side, the French Democratic Confederation of Labour (CFDT) warmly welcomed the ‘relevance of the topics’, while the French Confederation of Christian Workers (CFTC) saw a ‘good basis for negotiation’.

Some unions were more sceptical, however. Force Ouvrière (FO) stressed that the negotiations ‘will be difficult’ and the General Confederation of Labour (CGT) said it would ‘pay attention’ since the guidance document ‘does not close the door to some of the employers’ demands’.

Commentary

Prime Minister François Hollande said: ‘The social partners can find an historic compromise.’ He believes this can be done by the end of the year. It is a short period of negotiation, taking into account that the discussions will cover controversial themes on which social partners have been unable to reach agreement for years. But, as the government has stressed, there is ‘an emergency’ in the fight against unemployment and the social partners could win recognition if they were able to create a French version of flexicurity.

This is a significant moment because never before has a French government given the responsibility for such a fundamental reform of the labour market to the social partners.

In the document sent to the social partners, the government has attempted to be neutral, respecting the positions of both social partners. It has avoided words that are particularly sensitive both to unions, such as ‘flexibility’ and ‘competitiveness’, and to employers, such as ‘employment security’.

The main proposals are based on assessments by experts, and they present an opportunity for the social partners to establish a common approach to tackle unemployment.

Frédéric Turlan, IR Share

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