Negotiations on the overhaul of industrial relations - one year on

Download article in original language : FR0102134FFR.DOC

In February 2000, France's five main trade union confederations agreed to enter talks on the MEDEF employers' confederation's plan to draw up a joint framework for the "overhaul" of the French industrial relations system, and redefine the rules in order to create "decentralised, independent, partnership-based dialogue". MEDEF's proposal was designed to put an end to the perceived confusion over the respective jurisdictions of the social partners and the government. After a year of talks, agreements have been reached by February 2001 on three of the five issues on which discussions have started. In spite of this partial success, the overall result of the negotiations remains patchy.

In November 1999, the executive council of the Movement of French Enterprises (Mouvement des entreprises de France, MEDEF) issued a solemn declaration, calling amongst other changes for the establishment of a "new social constitution" (nouvelle constitution sociale) to curtail "burgeoning, incessant and destabilising intervention by the state", and for a "social-partner-led overhaul of the industrial relations system" (FR9912122F). In February 2000, the five representative trade union confederations - CFDT, CFE-CGC, CFTC, CGT and tCGT-FO- agreed to respond positively to MEDEF's proposal and work with MEDEF, the General Confederation of Small and Medium-sized Enterprises (Confédération générale des petites et moyennes entreprises, CGPME) and the Craftwork Employers' Association (Union professionnelle artisanale, UPA) on drawing up a joint framework for the "overhaul" of the French industrial relations system, and on redefining the rules in order to create "decentralised, independent, partnership-based dialogue". MEDEF's proposal was designed to put an end to the "current confusion over the division of social partner and government jurisdictions". Despite MEDEF's initial threat to pull out of the running of all jointly-managed social protection agencies at the end of 2000 if the negotiations did not lead to agreement, the trade unions agreed to take part in parallel talks on eight jointly-defined "issues". Here we examine progress by February 2001, one year after the process started.

The state of negotiations at the halfway point

After a year of negotiations, five issues have been put on the table and the corresponding working groups set up - see table below. Agreements have been reached on three issues: unemployment insurance (14 June 2000); health at the workplace (19 December 2000); and supplementary pensions (10 February 2001). In the light of the fact that the talks are far behind schedule, MEDEF, which had initially set 31 December 2000 as the final date for pulling out of jointly-managed agencies if no agreement was reached, has extended its original deadline indefinitely. To date, the employers' confederation has withdrawn its participation only from the National Association of Social Security Funds, (Union des caisses nationales de sécurité sociale, UCANSS), which coordinates personnel management in the various funds. MEDEF's reason for pulling out of this particular body had nothing to do with the industrial relations overhaul negotiations but rather with the implementation of the 35-hour working week for the funds' staff (FR0012109N).

Progress in industrial relations overhaul negotiations, February 2001
Issue for negotiation Start of talks Progress as of February 2001
Unemployment insurance March 2000 UNEDIC agreement signed on 14 June 2000 by the employers' associations and the CFDT, CFTC and CFE-CGC unions. Government assent on 6 December 2000.
Health at the workplace March 2000 Agreement signed on 19 December 2000 by the employers' associations and the CFDT, CFTC and CFE-CGC unions.
Supplementary pensions March 2000 Agreement signed on 10 February 2001 by the employers' associations and the CFDT and CFTC unions.
Collective bargaining March 2000 Talks underway on proposals tabled by MEDEF on 18 December 2000.
Vocational training December 2000 -
Equality at work Yet to begin -
Managerial and professional staff Yet to begin -
Social security Yet to begin -

Unemployment insurance agreement

Given that the previous agreement on the UNEDIC unemployment insurance scheme had not been renewed, the first issue to be discussed by the social partners was unemployment benefits. Discussions centred on a MEDEF draft agreement, which broke with the previous rules governing the system, in particular by introducing a "back-to-work assistance plan" (Plan d'aide au retour à l'emploi, PARE), requiring all unemployment benefit recipients to sign on to a personalised job-seeking contract. CFDT, CFTC and the three employers' associations reached an agreement on this issue. As a trade-off, the employers' associations agreed to eliminate reductions over time in unemployment benefit payments (FR0006171F). This draft agreement was rejected by CGT and CGT-FO. CFE-CGC, which had initially rejected the plan, later signed on to the agreement. The wording of the agreement led to a six-month stand off with the government. The signatories had to revise the content several times and resolve the dispute over funding between UNEDIC and the government before the deal was finalised and the government gave its assent in December 2000 (FR0010195F and FR0101114F).

Over and above the vagaries of the particular situation, these negotiations demonstrated how difficult it is for the social partners to push through a new division of jurisdictions with the government. The first version of the UNEDIC agreement explicitly sought to transfer decision-making powers in the area of unemployment benefits from the government to the social partners. MEDEF was the strongest advocate of this policy and, to this end, it inserted a specific clause which rendered the agreement null and void if the government withheld assent for the agreement as a whole. Faced with the intransigence of the Ministry of Labour, which refused to endorse the agreement without substantial amendments, the signatories were to all intents and purposes forced to admit that they were powerless to impose entirely independent industrial relations regulation on the government.

Health at the workplace agreement

The second agreement to be concluded deals with health at the workplace. This issue gave rise to fewer negotiating difficulties and an agreement was ready for signing on 13 September 2000. However, the actual signing had to be postponed until 19 December because of the uncertainty surrounding government approval of the unemployment insurance agreement (FR0101116N). Given the shortage of industrial doctors, the agreement alters their role by boosting their prevention-oriented functions and by leaving longer periods of time between compulsory medical check-ups. The task of defining "high-risk illnesses" that will continue to be covered by the current system of annual check-ups has been referred to sector-level negotiations between the social partners. Once again, only the employers' organisations and three trade unions (CFDT, CFTC and CFE-CGC) signed this agreement. CGT and CGT-FO, which oppose both increasing the period between compulsory medical check-ups and delegating the task of defining high-risk illnesses to the sectoral social partners, refused to sign.

Supplementary pensions agreement

The agreement on supplementary pensions turned out to be the most problematic. Indeed, right from the outset, the trade unions united to oppose employers' demands for an increase in the retirement age (currently 60 years old) and an increase in the required contribution period. Throughout the talks, MEDEF used the same pressure tactics that it had used for the unemployment insurance negotiations. This culminated on 21 December 2000 in a "take-it-or-leave-it" proposal from MEDEF. MEDEF's approach led to a stand-off between it and the five representative union confederations, which called a national day of action on 25 January 2001 in an attempt to force MEDEF to abandon its project and come back to the negotiating table under different conditions (FR0102132F).

No matter what the determining factor (union unity or internal dissent), on 9 February, MEDEF finally changed tactics and agreed to come back to the negotiating table with a new approach. The organisation immediately withdrew its instructions to companies to withhold payment of contributions to the Financial Structure Management Association (Association pour la gestion de la structure financière, ASF), which funds the extra costs for supplementary pension schemes brought about by retirement at 60 (in any case, not all companies had complied with this call). MEDEF then tabled a new draft agreement, guaranteeing funding for supplementary pensions until 31 December 2002. As a trade-off for this concession, MEDEF called on the government to overhaul the pensions system as a whole by 31 December 2002. In light of MEDEF's hostility to any increase in contribution levels, any such overhaul will have to increase the compulsory contribution period and the retirement age at which workers become eligible for a full pension. "Once the overhaul of the general pension fund had been completed," the social partners would convene negotiations aimed at adapting the various supplementary pensions insurance schemes. However, in the meantime, the general supplementary scheme, ARRCO, and the management and professional staff supplementary scheme, AGIRC, would be "merged" in an attempt to "streamline operations". These negotiations would aim to set streamlining targets by 31 March 2001 and develop procedures by 30 June 2001.

During 21 straight hours of negotiations, MEDEF once again succeeded in driving a wedge between the trade unions. CGT left the bargaining table during the night, lambasting MEDEF's "manipulation" of the trade unions. During the night, MEDEF began separate talks with CFDT, CFE-CGC and CFTC, at the same time as it threatened recalcitrant unions with the "demise of the parity principle" (paritarisme- ie joint social partner management of various bodies - FR0001134F). Finally, CFDT and CFTC agreed to sign the agreement after a few amendments were made. An explicit and forceful demand to the government was removed. This agreement requires the government to "stabilise" contribution levels for 10 years. It encourages the government to meet this goal through a policy of variable contribution periods. The agreement does not pre-empt the levying of additional "connected contributions" to balance the budget of the various pension schemes.

MEDEF, CFDT and CFTC stated, after consulting their governing bodies, that they would sign the agreement. CGT-FO and CFE-CGC announced that they could support only part of it. These unions maintained that it was not the role of the social partners to dictate the criteria and timescale for legislative reform to the government. CGT, on the other hand, flatly rejected the agreement and called on workers to "block the deal". MEDEF, which sees its demands for parliament-led reform of pensions as central to the agreement, views any partial signature as tantamount to rejection.

Collective bargaining

Ironically, it is the issue of collective bargaining, which MEDEF sees as the heart of the "industrial relation overhaul", where least headway has been made. MEDEF has taken on a more open approach to this issue within the relevant working party, but its proposals arguably remain very extreme. MEDEF basically wants to topple the current structure of labour standards based on labour law and the principle. Under this principle, sector-level negotiations may only improve the guaranteed benefits stipulated in the law, just as company-level negotiations may only improve on guaranteed benefits provided for in sectoral agreements. Under MEDEF's proposals, in the future, agreements would have primacy over the law, which would play only a subsidiary role. Similarly, company agreements would take precedence over sectoral agreements, which would be applied only in the absence of a company-level agreement. This proposal is part of a policy that the employers' organisations have been advocating since the early 1980s, which places more emphasis on negotiation at company level rather than at sectoral or intersectoral level.

On 18 December 2000, MEDEF tabled a draft agreement in the form of dossiers summarising the organisation's previous proposals on "ways to develop collective bargaining". This proposal breaks with the organisation's initial commitment to reach a full-blown agreement on this issue with the trade unions. It suggests only the development of a "common position" to be used as a basis for negotiation with the government. However, current union reaction shows just how far off this common position is.

The MEDEF project proposes dividing industrial relations regulation jurisdiction into the following three areas: exclusive government responsibility (setting the basic legal order for the labour law area); shared social partner-government jurisdiction; and exclusively social partner controlled areas. Such a classification would be in line with section 34 of the French Constitution. Nevertheless, MEDEF is suggesting an amendment to the Constitution. It is proposing that the Constitutional Council (Conseil constitutionnel), or a body reporting to it, should set out the scope of the respective areas of law and collective bargaining. The Court would therefore be able to guarantee the compliance of agreements with the basic legal order. This role is currently the responsibility of the government and is monitored by the courts. As far as shared jurisdiction between the social partners and the government is concerned, legislation would be introduced only as a last resort in the absence of a negotiated agreement. As a parallel measure, each level of bargaining would be independent. Provisions negotiated at the higher level would take precedence at a lower level only in the absence of a negotiated agreement on the same issue at the lower level. However, if the situation were reversed, decentralised agreements could take precedence if the signatories deemed them "better adapted" and "generally at least as positive" as centralised agreements.

MEDEF is also advocating that a right to negotiate experimental worker representation structures in small and medium-sized businesses (which often have no union representation) be developed. The organisation is suggesting that sectors set the terms and conditions for collective bargaining in companies with no trade union delegate s. Negotiations could be conducted with elected employee representatives, or failing that, union-appointed employees. A 31 October 1995 intersectoral agreement opened the door to this type of representation arrangement (known as "mandating"), but only if a sector-level implementation agreement is reached (FR9807123F). More recently, in 1998 the first 35-hour week law authorised such mandating for negotiations on the reduction of working time (FR9806113F).

As far as legislation is concerned, MEDEF is advocating compulsory consultation "prior to any legislative initiative in the area of industrial relations". The social partners would be asked to evaluate the legislation's "appropriateness" and they could, if they so wished, deal with the issue through collective bargaining, with the agreement reached possibly being ratified by parliament. This proposal draws on the EU-level social partner consultation procedure laid out in the European Community Treaty (Articles 138 and 139).

Union reaction to bargaining proposals

MEDEF's proposals did not succeed in breaking the stalemate in the negotiation process over the collective bargaining system, since the trade unions do not subscribe to the idea that the underdevelopment of collective bargaining in France is exclusively due to the government's resolve to have a hand in the process. In the view of the unions, the social partners - and in particular the employers' associations - must also shoulder part of the blame for the current state of affairs. Therefore, the unions are all firmly committed to the current structure of industrial relation norms and reject utterly MEDEF's idea of independent, level-specific bargaining. They also reject MEDEF's proposal of involving the Constitutional Court in the definition of the jurisdictions of the social partners and government. Their rejection of this idea was probably influenced by a Constitutional Court ruling on 13 January 2000, when it vetoed a provision in the second 35-hour week law - referred to it by the parliamentary opposition - whereby sectoral agreements were required to comply with the new law (FR0001137F).

Although the unions generally reject the proposals outright, some have found common ground with MEDEF's plans on some isolated issues. For example, CFDT supports the across-the-board implementation of the mandating system in small and medium-sized businesses and the articulation of legislation and bargaining in line with the EU-level consultation procedure. At a meeting on 7 February 2001, in an attempt to break the deadlock in negotiations, CFDT proposed referring to the original 31 October 1995 intersectoral agreement on mandating (FR9904177N) as a basis for discussions. This agreement represented a first joint attempt to articulate the various levels of bargaining. The agreement was appraised by the collective bargaining working group and was initially evaluated negatively by MEDEF on the grounds that it had produced very few sectoral implementation agreements. However, the employers' confederation has since agreed to re-evaluate the agreement, as have both CGT and CGT-FO, which were not signatories. This second appraisal was postponed until a meeting in March 2001, after the outcome of the 9-10 February 2001 talks on supplementary pensions were available, in order to clarify the stances of the various unions and employers' associations.


The three agreements signed within the framework of the negotiations on the overhaul of industrial relations have been a relative success for the architect of the talks, MEDEF. The employers' confederation succeeded in splitting the fragile trade union pact three times and was able to strengthen what appears to be a budding alliance with one of them, CFDT. In so doing, MEDEF accomplished one of its economic goals - to stabilise or even cut employers' social security contributions. Even though interpretation of the supplementary pensions agreement remains controversial, MEDEF succeeded in making stable or reduced security contributions a prerequisite for the overhaul of the entire pensions system.

However, it is less clear whether MEDEF has reached its strategic objective of defining the line between the jurisdictions of the social partners and the government, and of restricting the scope of intervention of the latter. As far as the stand-off over unemployment insurance is concerned, it was the government which finally enforced its prerogative powers in the public interest. MEDEF now appears to have admitted that sooner or later negotiations with the government will have to take place if an overhaul of the industrial relations system is to take place at all. Yet, on the supplementary pensions issue, MEDEF risked provoking industrial action on an unexpected scale and a renewed pact between non-signatory unions and the government. As far as the core area of the overhaul of collective bargaining is concerned, negotiators will now need unprecedented skill to ensure that the overhaul of the industrial relations system is anchored on a solid social and legal foundation. (Udo Rehfeldt and Catherine Vincent, IRES)

Useful? Interesting? Tell us what you think. Hide comments

Eurofound welcomes feedback and updates on this regulation