France: Mixed reactions of social partners to labour market reform

The focus in France this summer has been on reforming the Labour Code with a view to reducing long-term mass unemployment. The government adopted five ordinances  on 22 September 2017  – the first step in a massive reform of the labour market involving the social partners.  

Positive reactions from employers 

The reactions of the three national-level employer organisations have been very positive to the recently announced reform of the Labour Code, whose five ordinances were adopted by the government on 22 September 2017. The reform takes into account long-standing employer demands such as a limit on the amount of compensation the labour courts can order to be paid in the event of unfair dismissal. At a press conference, Pierre Gattaz, President of the main employer organisation, the Movement of the Enterprises of France (Medef), welcomed it as an important first step that would build trust with business leaders. He welcomed the new procedure, ‘collective conventional termination of contract’ (rupture conventionnelle collective), which will make it easier for voluntary redundancy in the event of overstaffing. In a statement, Medef said it believed this reform aims to give companies, especially small and medium-sized enterprises, the ability to adapt along with their employees to changes in the world.

However, Medef has also said that the ordinances do not go far enough in simplifying social dialogue for companies with between 50 and 300 employees, and it regretted the increase in statutory redundancy payments. The Confederation of Small and Medium Enterprises (CMPE), considered the ordinances to be ‘particularly pragmatic, adhering to the realities on the ground’. As for the Union of Local Businesses (U2P), representing liberal professionals and craft workers, its president indicated that it was fully satisfied by these ordinances, as it felt its views had been heard ‘on almost all points’.

Mixed reactions from the unions

Reactions from the unions’ side were more mixed. The General Confederation of Labour (CGT) is directly opposed to the reform and warned that it intends to spearhead the protests at trade union level. It released a statement saying that the reform would, ‘like the previous ones, not improve unemployment, further increase job insecurity, and develop poverty as can already be seen in Germany or England’. CGT organised a day of mobilisation, on 12 September, with the French group of trade unions Solidaires (SUD), and is planning further action. Some 30 trade unions affiliated to CGT filed an appeal on 7 September against two provisions of the previous law reforming the Labour Code and announced that they were preparing legal action against the ordinances.

The four other representative trade union confederations at national level do not plan to take to the streets, although some are very critical of the reform. The French Democratic Confederation of Labour (CFDT), said in a statement that it was a missed opportunity. CFDT is, traditionally, the most open to reform, supporting, for example, the last labour law reform of 2016. The union’s Secretary-General, Laurent Berger, expressed his disappointment in an interview with French national newspaper Le Monde in August. He regretted that the government had retained only a few of CFDT’s proposals and criticised the reforms on collective dismissals. This is because economic reasons will be evaluated at the level of companies that belong to the same group only if they are located on French territory and if they carry out the same activity. He also fears that the new mechanism to be used in redundancies could affect the employment status of older workers.

The French Confederation of Professional and Managerial Staff – General Confederation of Professional and Managerial Staff (CFE-CGC), which is traditionally open to reforms, is also disappointed and very critical of the new ordinances. In a press release, the union described the reform as a text ‘which does not facilitate entry into the job market but rather facilitates the exit!’.

The General Confederation of Labour – Force Ouvrière (FO), which opposed the last labour law reform, has adopted a more conciliatory tone. Its General Secretary, Jean-Claude Mailly, acknowledged ‘fundamental points of disagreement’, but said he believed that the result could have been worse and that his organisation had blocked the more harmful provisions for employees during consultations with the government. Its position is largely explained by the concession made by the government to preserve the role of collective bargaining at the branch level, instead of a total decentralisation in favour of company-level agreements. However, the FO Executive Board issued a more critical statement on 4 September, saying that ‘many elements today constitute a social regression and are as such unacceptable’. Although there are internal dissensions, FO takes on the essential role of interlocutor with the government, as does CFDT, while CGT remains on the sideline.

Consultations on other elements of labour market reform

Despite criticism, the trade union confederations are not yet at breaking point. This is because the reform of the labour market announced by the new government includes other important elements, which could include provisions favourable to employees and job-seekers, in return for the flexibility and legal certainty obtained by employers.

The first project on the list is the reform of unemployment insurance, which has been managed by the social partners since 1958. The project also aims to extend the scheme to self-employed workers and employees who have resigned after five years of working with the same employer. The abolition of social contributions is expected to be offset by an increase in the General Social Contribution, which would be applicable to all incomes.

Two other projects were also announced. One is a reform of apprenticeships with a formula considered to be an efficient way of integrating young people into the labour market, but which is struggling to take off. The other is a redesign of the vocational training system with a €15 billion investment plan in skills, to be unveiled at the end of September. The goal is for one million young people who are having difficulty finding employment, as well as one million low-skilled unemployed people, to receive skills training during President Macron’s five-year mandate.

Commentary

The general objective of the labour market reform is to reduce the mass unemployment that has persisted in France since the 1980s. Because the reform of the Labour Code is clearly in favour of employers, the government must now demonstrate that it will compensate for the weakening of labour law protections through new measures such as unemployment insurance reforms and vocational training.

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