France: Talks on reform of social dialogue collapse

After almost four months of negotiations, social partners have failed to agree on how to reform social dialogue in France. Employers wanted to simplify employee representation at company level, but were unwilling to compromise on a core union aim of representation in small companies. A draft bill is expected soon from the Minister of Labour.

Background

In July 2014, the French Government invited 300 social partner representatives to the third high-level Social Summit (Grande conférence sociale). The first summit in 2012 paved the way for the conclusion of a landmark agreement on labour market reform. The second conference, in 2013, led to agreement on a vocational training reform

The Government hoped for similar success in 2014 with the modernisation of social dialogue. In his opening speech, President François Hollande announced that he had asked the Minister of Labour, François Rebsamen, to draft a guide for negotiations between social partners. The focus of the discussions was a simplification of the  'social thresholds'  (seuils sociaux). These thresholds, based on the number of employees a company has, determine:

  • companies’ obligations to organise elections for employee representation bodies (staff delegates, works councils, health and safety committees);
  • companies’ obligations to negotiate annually on certain issues (such as wages, working time, employment, employment of older workers);
  • the size and terms of some employers’ contributions;
  • procedural, accounting, legal and tax issues.

In all, there are 16 thresholds with numerous obligations.

The most controversial ones are those that govern the creation of employee representation bodies. The President, the Prime Minister and the Minster of Labour supported the employers' wishes for a more flexible approach. However the unions and parts of the ruling Socialist Party (PS) expressed serious concerns about this.

Those who argue in favour of a more flexible relationship between the number of employees and the type of representation required say that that employers might be reluctant to employ an additional person if it meant crossing a certain representation threshold. However, a study suggests that social thresholds will have little effect on recruitment decisions (in French, 1.71 KB PDF) . The authors, from the public Institute for Statistics and Economic Studies (INSEE) argue that the issue is to what extent employment levels affect the thresholds, not how the thresholds affect employment.

Tough negotiation rounds

At their annual meeting in September 2014, the national social partners agreed that they would conclude negotiations on modernising social dialogue by the end of the year. The tight schedule was supposed to encourage swift decision-making and, as is usual in talks such as these, the government announced that it would take unilateral action if no agreement was reached.

Negotiations started on 9 October, but participants reported that the issue of social thresholds had been omitted from the agenda and that no real progress had been made. At the second round of negotiations three weeks later, the social partners still could not agree. Employers proposed far-reaching changes that none of the representative unions could accept. The unions felt that their concerns were not being taken into consideration.

Moreover, a union source said that employers, particularly those with fewer than 11 employees, were divided on the issue of thresholds. The General Confederation of Small and Medium-sized Enterprises (CGPME) flatly refused to consider collective representation for small businesses, whereas the Craftwork Employers’ Association (UPA) was in favour. The position of France’s largest employers’ organisation, the Movement of French Enterprises (MEDEF), seemed rather ambiguous.

These differences meant that the three associations failed to agree a joint proposition for the third round of negotiations on 21 November and talks were adjourned without any progress being made. Further negotiations, scheduled to take place before Christmas, were postponed until January. This meeting was also adjourned, and negotiations finally broke down on 22 January.

Disagreement on representation

The final proposal of the employers was in favour of creating one representative committee for each establishment by merging existing structures such as:

  • the works council (comité d’entreprise);
  • staff delegation (délégués du personnel);
  • health and safety committee (CHSCT).

The employers agreed that companies with more than 300 employees would still need a separate CHSCT unless all parties agreed otherwise. They proposed that in companies with between 11 and 49 employees, a new works council would replace only staff delegates' bodies because workers in these enterprises have no statutory right to set up a works council or a CHSCT. The aim of these proposals was to simplify the threshold system for employers, since only existing institutions would have to be granted extended rights, but no new ones would have had to be set up.

The General Confederation of Labour (CGT) and Force Ouvrière (FO) rejected the proposition. The three other representative unions, the French Democratic Federation of Labour (CFDT), the French Confederation of Christian Workers (CFTC) and the French Confederation of Professional and Managerial Staff – General Confederation of Professional and Managerial Staff (CFE-CGC) said they would agree with the proposal only if the new body kept the same rights as the ones it replaced.

There was thus room for compromise, but the employers proved unable to concede any ground on the issue of representation in very small companies. CGPME and some of MEDEF’s federations categorically refused any kind of collective representation in establishments with fewer than 11 workers. MEDEF’s national negotiator proposed setting up regional cross-sectoral committees to advise employees in small companies, but which would not have the right to intervene in an enterprise. A similar system is already in place in the craft sector.

However, the two sides disagreed over the role and funding of these institutions. The CDFT, in particular, claimed that the new committees would also need to play a role in conflict prevention and mediation within a company. The other unions claimed that the threshold of 300 employees for the establishment of a separate CHSCT was too high. Also, employers were unwilling to give extra money to regional committees, although the unions stressed that the existing institutions were already adequately funded.

Commentary

It is notable how the scope of the negotiations has narrowed. Initially, MEDEF’s Director for Social Affairs, Antoine Foucher, said the issue of social thresholds could ‘not be reduced to what kind of staff representation shall exist, but it must also deal with all obligations that generate complexity and costs’. However, in the end, social partners focused on employee representation – and still failed to agree.

The Minister of Labour is now expected to issue a draft bill in mid-May 2015 proposing reforms to French social dialogue. It is expected to address the two broad issues covered by the negotiations: the merger of existing employee representation bodies, and the introduction of regional committees for small companies. Details have not yet been announced.

The social partners have missed an important opportunity to reform social dialogue in France. It was essential to show that changes do not necessarily mean restricting union and employee rights. However, employers failed to make the necessary concessions and may thus have strengthened the arguments put forward by union hardliners who would rather not talk with employers at all.

It is also likely that the use of social dialogue as a basis for social legislation has been damaged by the failure to agree on such a symbolic issue. Although the Prime Minister and the Minister of Labour have recognised the importance of bipartite bargaining, it remains to be seen what role social dialogue will play in future labour market reforms in France.

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