France: Impact of the crisis on industrial relations

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  • Published on: 17 June 2013

Sebastian Schulze-Marmeling

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An analysis of the impact of the financial crisis on industrial relations in France yields two perspectives. First, some degree of stability can be observed when looking at the activity of social dialogue at all levels – national, sectoral and company. More qualitative accounts, on the other hand, point towards increased difficulties for unions and employees to resist employers’ threats of delocalisation and closure, which might force them to accept unfavourable agreements. Social partners’ views differ. Whiles the largest employers’ organisation lobbies for decentralisation of collective bargaining to boost competitiveness, some unions approach employers with growing reluctance whereas others put their hopes on social dialogue.

Section 1: Basic data on the impact of the crisis on industrial relations

1.1: Academic studies

Academic research by Freyssinet (2011) analyses 19 national interprofessional agreements (accords nationaux interprofessionnels, ANI) concluded during the crisis (September 2008 to October 2011). The study finds that the social consequences of the crisis are a central issue to national bargaining, and identifies three stages of national bargaining related to the crisis. During an initial phase, agreements often aimed at supporting the economic recovery, for instance through short-time work (chômage partiel). In a second phase, social partners favoured competitiveness and restoring public finances. The 2009 agreement on lifelong learning is a case in point. In addition, it is argued that the agreements concluded show an effort of social partners to maintain the functioning of social dialogue as a mean of social regulation in France.

1.2: Government and social partner research

Table 1). First, increases in pay and working time negotiations at company levels have slowed down with the crisis, and eventually turned negative in recent years. The impressive rise in agreements on employment around 2008 is largely due to the introduction of compulsory company bargaining on the employment of older workers by that date (FR1210011), and has slowed down since. Equal treatment is on a constant rise, which is mainly due to 2010 legislation that imposes a fine on companies without agreement on the issue (FR1207011I), whereas negotiations on health and retirement, and vocational training have diminished during the crisis (Desage, 2012). It should be noted, however, that the overall rate of companies (with 10 or more employees) that engage in company bargaining is only at around 15% (Desage & Rosankis, 2012) and social dialogue is largely absent from small workplaces.

Vivid activity of social dialogue at interprofessional level was confirmed by social partners themselves. On a review meeting in November 2011, employers and unions reviewed their activities in the first six months of the same year and stated that they had concluded eight interprofessional agreements in that period. Four agreements covered youth (un)employment (FR1105041I), other issues include pension and unemployment insurance, and other amendments to the organisation of social protection (FR1105031I).

The DARES survey on industrial relation REPONSE 2010-2011 was launched during the crisis and highlights that employers gave more information to employees than previously. 65% of employers from companies with 20 employees and more explained that they provided information on the economic situation of their company on a regularly basis, against 46% in 2005. 48% of them give information on the impact of the economic trends on social and environmental issues. Moreover, the number of works council has decreased since 2005. In 2011, 28% of companies with 20 and more employees had a works council against 34% in 2005. The decrease is more severe in companies with more than 50 employees (–8 percentage points). In those companies, the implementation of shop stewards also decreased slightly over the same period, from 38% in 2005 to 35% in 2011. The study explains these trends by shifts in employment away from industrial sectors in which information and consultation were traditionnaly well established, and a strong decrease of the presence of information and consultation bodies in the construction sector. Both sectors were severly impacted by the crisis.

1.3: International comparative research1.4: Grey literature1.5: Relevance of debate

Please indicate if this topic is an issue for debate in your country, either in terms academic, political or debate among the social partners. Please tick the relevant box.

 a) academic debate

very relevant


 not very relevant

 not relevant at all

b) political debate

very relevant


 not very relevant

 not relevant at all

c) debate among social partners

very relevant


 not very relevant

 not relevant at all

Section 2: Policies, instruments and regulations

2.1 EU-level instruments

Please give details of the way in which the New Economic Governance at EU level resulting from the crisis (e.g. the six pack, troika memoranda, EuroPlus Pact) has had an impact on industrial relations in your country. Please consider, inter alia, if it impacted on

  • wage setting mechanisms;
  • indexations mechanisms;
  • the degree of centralisation of collective bargaining;
  • public sector pay;
  • other.

Since France did not have to apply for financial help from any of the international rescue mechanisms, none of the sponsoring organisations or countries has a direct impact on French laws or practises.

2.2: Governmental instruments

It is rarely disputed that the most important legislation on industrial relations in recent years was the 2008 act on renewing social democracy and working time (Escande-Varniol, 2012). This is, however, not related to the crisis and has been covered extensively in other Eurofound publications (for instance FR0808039I, FR1007031I, FR1010011I). There are two contrasting developments that can be identified in France during the crisis. On the one hand, and in contrast to other European countries in which the crisis has triggered far-reaching retrenchment of employee and unions rights, France observes active involvement of social partners in the implementation of – to some extent – crisis-related reforms. The following list discusses the most important examples.

Since 1 January 2012, companies with at least 50 employees must be covered by an agreement to prevent long-term or short-term damage to employees’ health if at least 50% of their workforce is exposed to harmful working conditions. If the company fails to do so, a fee of up to 1% of the enterprises labour costs applies. This reform was implemented in the course of the major 2010 pension reform and shall improve working conditions and, in turn, allow employees to work and contribute for an extended period. The eighth report of the Pension Steering Committee (Conseil d'orientation des retraites, COR) makes explicit reference to the crisis, its impact on pension funding, and how that amplifies the necessity of a comprehensive reform.

Similarly, the law on funding social security in 2011 introduced compulsory bonus payments for employees if the employing company increases its dividend to shareholders. The design of the bonus scheme is subject to company bargaining, but the employer may decide unilaterally if no agreement is reached. It remains to be seen which impact the law will have on social dialogue at company level.

In addition, there is a lively debate among social partners about an initiative to open social dialogue at company level to deteriorate from higher-level agreements, or even from the labour code in order to save jobs and increase the competitiveness of the French economy. Deteriorations are in principle and on a limited range of issues possible since 2004. Nicolas Sarkozy, however, launched, in January 2012, a proposal that would allow social partners to negotiate company agreements on working time that deteriorate from the legislation on the 35-hour working week in exchange for job guarantees. Social partners were to negotiate the proposal on the so-called competitiveness and employment agreements, but decided to postpone discussions until they had met with the then newly-elected president François Hollande. The latter had fiercely opposed competitiveness and employment agreements while campaigning for French presidency, but has now revitalised the debate and asked social partner to accelerate their negotiations.

On 11 January 2013, social partners presented the draft of an interprofessional agreement, which includes measures that are aimed at securing employment and, in return, introduces additional flexibility into sectoral collective bargaining (FR1302011I). Most notably, the agreement proposes to incentivise permanent contracts by increasing the employer’s contribution to unemployment insurance for short-term contracts. Moreover, youth employment shall be fostered by waiving the same employer’s contributions for up to three months (four months for small companies) for permanent contracts for young people under the age of 26.

On the other hand, the agreement proposes the possibility of company agreements that deteriorate from wages and working time negotiated at sectoral level, but not below the national minimum wage, in exchange for job security in companies in severe economic difficulties. These agreements may not exceed a maximum duration of two years and must be approved by a majority of the representative unions within the company. If an individual employee refuses the deteriorated working conditions, an eventual dismissal for economic reasons will not be contestable. Moreover, the agreement includes a simplified process of restructuring and redundancies without social plan through internal mobility and easier access to short-time work.

The Government, France’s largest employers’ association, the Mouvement of French Enterprises (Mouvement des entreprises de France, MEDEF), and the French Democratic Confederation of Labour (Confédération française démocratique du travail, CFDT) are in favour of the compromise whereas the General Confederation of Labour (Confédération générale du travail, CGT) and Workers’ Force (Force Ouvrière, FO) expressed their disagreement with the outcome. Reactions by the other unions involved, the French Christian Workers’ Confederation (Confédération française des travailleurs chrétiens, CFTC) and the General Confederation of Professional and Managerial Staff (Confédération française de l'encadrement - Confédération générale des cadres, CFE-CGC), were mixed but both stated that they would sign the agreement nonetheless. The Government is believed to issue a draft based on the social partners’ agreement by March.

2.3: Measures from social dialogue and/or bipartite and tripartite bodies

Table 1 below). There is no evidence that would suggest an impact of the crisis. The peak in 2010 might be explained by a round of elections of employee representatives in 2011, which was in many instances the first time that the new 2008 legislation was applied. Hence, social partners concluded a range of ‘pre-election agreements’ ( Ministère du Travail, 2012 ). There is no systematic evidence on the content of these agreements apart from the qualitative accounts presented below.

Whereas the regulatory framework for industrial relations is relatively stable, it will be argued below that pressure on industrial relations stems from employers pushing for more flexible and decentralised collective bargaining using closure and redundancies as threat in case of non-compliance. Since these are practises rather than measures, they will be discussed below.


2.4: Severity of impact of policies, instruments and regulations

How severe do you think new policies, instruments and regulations (at EU, governmental (central, regional or local level), or social partner level) resulting from the crisis have had an impact on industrial relations in your country ? Please tick the relevant box.

EU new economic governance

very severe


 not very severe

 not severe at all

National governmental instruments

very severe


 not very severe

 not severe at all

National social partners’ measures

very severe


 not very severe

 not severe at all

Section 3: Impacts of the crisis

3.1: Impacts on industrial relations actors

3.1.1 The industrial relations actors in this section will principally be the social partners at all levels, including national, regional, sectoral and company. Please describe any relevant impacts.

In terms of trade unions, France is often described as an exception in Europe since it combines the lowest trade union density in Europe with relatively strong union workplace presence (Wolff, 2008) and high collective bargaining coverage. Before the current economic and financial crisis hit European labour markets, some 7.6% of French employees were member of a union in 2008, according to OECD figures. Although membership had increased slightly in previous years, it was slower than the growth of the number of people in employment and the density figure dropped slightly. Newer data on the impact of the crisis on membership are not available but there is little evidence to suggest that involvement in organised labour has changed dramatically either way. Moreover, there was no major restructuring of the movement. Similarly, no substantial changes in employers’ organisations could be identified although it is noteworthy that their membership rates are traditionally much higher than the one for the unions.

3.1.2 Overall, how severe do you think the impact of the crisis has been on industrial relations actors in your country? Please tick the relevant box.

 very severe


 not very severe

 not severe at all

3.2: Impacts on industrial relations processes

3.2.1 Please describe impacts in the following areas:

Impacts on:

collective bargaining arrangements;

  • centralisation or decentralisation trends;
  • the introduction of opening clauses;
  • changes in the extension of collective agreements;
  • wage setting mechanisms;
  • indexations mechanisms;

arrangements for employee information, consultation and participation;

  • organisation of industrial action;
  • procedures for dispute resolution;
  • changes in the relationship between the social partners, either leading to closer cooperation or more conflict.

Up to date data are available on industrial relations processes and outcomes. The French Ministry of Labour (Ministère du Travail) publishes annual information on collective bargaining in France, which makes it possible to differentiate social dialogue activities at different levels. The number of national interprofessional agreements seems to fluctuate independent of the crisis. Hence, 26 agreements were concluded in 2008, 58 in 2009, 25 in 2010 and 46 in 2011. Other research, however, has identified distinct crisis patterns of the subjects covered by these agreements (Ministère du Travail, 2008, 2009, 2010, 2011, 2012).

Recent experiences with these kinds of ‘bargaining in the shadow of relocation’ have been featured prominently in French press. There are, however, further accounts by the unions that support the suggestion that the pressure on company bargaining as a result of the crisis is a wide-spread phenomenon. Hence, it is reported the employers’ reluctance to negotiate certain issues or, if that is impossible, to agree on ‘minimalist’ provisions only. Budgetary constraints on the companies are used by employers to exclude issues such as the compensation of workers or the companies’ financial situation with regards to capital and investment for future employment, it is further argued. Thus, parts of the union movement feel that “often the results are not worth the effort of negotiation” (FR1207011I).

Similarly, strike activity has intensified. The number of working days lost per 1,000 employees have been stable since 2007, but more than doubled between 2009 and 2010 (136 and 318, respectively). By far the most affected part of the economy was the transport sector with 1,151working days lost in 2010, which was almost twice as high as in 2009. The highest increase is reported from industry where strike activity tripled from 196 to 604 lost working days. Low levels – but high increase rates – are recorded in construction and commerce (27 working days lost in 2010 with an increase of 145% and 36 days and 177% increase, respectively). The service sector experienced an average of 131 working days lost in 2010 against 66 in the previous year (Desage & Rosankis, 2012).

Finally, a joint social partner commission that sets the agenda for interprofessional social dialogue and that meets four times a year decided, in November 2011, to meet monthly in order to be able to react to urgent socio-economic issues (FR1105031I)

3.2.2 Overall, how severe do you think the impact of the crisis has been on industrial relations processes in your country? Please tick the relevant box.

 very severe


 not very severe

 not severe at all

3.3: Industrial relations outcomes

Figure 3). The other large French trade union confederation, CFDT, however, signed three-quarter and 80% of the sectoral agreements during the crisis. Moreover, the CGT still signed more than half of the company agreements in 2011 without there being more a distinctively negative trend.

On the other hand, there is substantial evidence to believe that the stability suggested by statistics is to some extent superficial. More qualitative accounts of the substantive contents and outcomes of negotiations, in particular at lower levels, show a different picture. Most notably, unions claim that they are confronted with increasing pressure from employers to accept less favourable agreements in exchange for promises not to reduce staff numbers. The long-term outcomes of these agreements are mixed. For instance, when Peugeot Motorcycles announced, in 2008, to relocate production of scooters to China, unions in the two French plants agreed to renounce half of their rest days gained through the transition to the 35-hour week (Réduction du temps de travail, RTT) and the suppression of break time. Both measures were implemented without financial compensation, but management made the promise to manufacture a new product line in France. One year later, the company announced relocation to China, the closure of one of the French plants and massive redundancies in the other one.

For the unions and, more generally, employees the trade-off between giving up some of their social achievements in exchange for job security often turns out to be a predicament because there is no real choice of negotiation. The case of Goodyear illustrates this point. Management announced to the employees at their two French to make some “efforts” in order to tackle the impact of the crisis. In exchange for employment guarantees and new investment unions have had to renegotiate the working time agreement on the 35-hour working week. If they did not conclude an agreement, the CEO had threatened to close down production in France. Finally, an agreement was signed in one of the plants only, which received the investment as promised whereas the other site experienced disinvestment and was announced to be closed. Similar examples are reported from General Motors in Strasbourg and Continental in Clairoix.

Perhaps a more positive case is the one of Bosch in Vénissieux. When closure was announced management and unions, in particular the CFDT, agreed to change the production line from diesel pumps to solar panels and, thus, assured that production could continue and jobs were saved (FR0408101N). In late January 2013, however, Bosch announced a record loss of almost €1billion with its solar-panel business and will review the future of its activities in the sector.

Another example for a trade-off agreement is reported from Northern France. The accord was conducted at the site of Peugeot-Citroën’s subsidy Sevelnord in July 2012. Management and three local unions agreed on a two-year pay freeze and the reduction in annual leave in exchange for job security (FR1209041I).

Finally, an interesting example is reported from the metal industry. Employers and all representative unions in the sector decided, in May 2010, to introduce increased inter-company mobility of skilled workers and, thus, hoped to improve employment stability. The new provisions allow workers with at least two years of service to accept employment with another company while retaining the right to return to their previous employer after two years (FR1007041I) Another policy-related agreement signed in January 2012 simplifies the access to the French short-time working scheme (FR1112031I).

3.3.2 Overall, how severe do you think the impact of the crisis has been on industrial relations outcomes in your country? Please tick the relevant box.

 very severe


 not very severe

  • not severe at all
Table 1 – Number of Company Agreements by Topic Covered and Year-on-year Change
2007 - 2011

















Pay (wages and bonuses)











Working time











Financial participation, employee saving schemes






















Employee representation











Equal treatment











Health and retirement











Working conditions











Job classifications











Vocational training






















Notes: Agreements may cover more than one issue so they do not add up. *Provisional figures

Source: Ministère du Travail

Figure 2 – Percentage of Sectoral Collective Pay Agreements with the Lowest Pay Grade below the National Minimum Wage (SMIC)

Figure 2 – Percentage of Sectoral Collective Pay Agreements with the Lowest Pay Grade below the National Minimum Wage (SMIC)

Source: Ministère du Travail (2012)

Figure 3 – Percentage of Sectoral and Company Agreements signed by the two major Trade Union Confederations

Desage (2012); Ministère du Travail (2012)

3.4: Severity of impact on industrial relations

Section 4: Views of the social partners

France industrial relations have long been characterised by high levels of conflict between employers and labour, but some observers have identified signs towards a more consensual system. The crisis, however, seems to have polarised their positions again.

Medef centres its public statements during the crisis on the notion of competitiveness of the French economy. With regards to industrial relations, MEDEF has been pushing for more flexibility in company bargaining, the possibility to deteriorate from higher-level regulatory frameworks or, in other words, for decentralisation. In summer 2012, the Institute of the Enterprise (Institut de l’entreprise), a think-tank that brings together large companies, employers’ associations (such as MEDEF) and other actors in the field, published a document that summarises a range of demands that go further than what had been discussed previously. Most notably, they claim that company agreements should be legally superior to the law. That would mean that if a company agreement included provisions less favourable than a sectoral agreement or the national labour code, the company agreement would apply nonetheless. Moreover, local managers should be given the possibility to negotiate pay and working time.

The unions, on the other hand, have different positions in the current debate. In most cases, it is the CFDT that concludes and signs company agreements on competitiveness, and tries to play an active role in finding innovative solutions (see the example on Bosch above). The organisation has also expressed its willingness to discuss the proposal by the new government on company bargaining (see above). The CGT is shows more reluctance to the involvement of social partners in managing the effects of crisis at company level. The union stresses coercive role of employers in threatening the workforce with closure and dismissal in order to push to sign unfavourable agreements. The CGT’s responsible for employment, Maurad Rabhi, said: “Both the workers and the unions are given the unacceptable choice whether they want to shoot themselves in the left leg or in the right one.”

Section 5: Commentary by the national centre

Stability at the surface …

At first glance, institutional arrangements for industrial relations seems to be fairly unaffected by the crisis. The strong role of the state continues, union rights remained unchanged and collective bargaining arrangements appear to be fairly stable. Those reforms that have led to some degree of decentralisation have been negotiated and concluded before the crisis and are not related to the developments since 2008. Moreover, research presented here has shown that social partners at national level are committed to social dialogue as a mean of societal regulation (Freyssinet, 2011) and collective bargaining activity at sectoral and company level have been fairly stable. Similarly, it has been observed that French labour law has proven resistant to the crisis as of yet, although some scholars expect a major revision of employment regulation in the next years (Verkindt, 2012).With regards to pay, a positive trend is recorded in the sharp decline of collective agreements that fix pay rates below the national minimum wage. The 2011 annual pay review showed that the average nominal collectively agreed pay increase was at 2.1%. Although this was not sufficient to keep up with inflation, it puts France third out of the twelve EU countries taken into account (TN1204012S).

… but erosion from below?

An opposite trend, which is not reflected in the statistics, is reported from the lower levels. Threats of delocalisation and closure have forced unions to negotiate and to accept inferior working conditions, but the security of their employment remains uncertain as the examples above show. Possibly as a result, strike figures show a substantial increase in 2010. The industrial sector that is particularly prone to outsourcing reports the highest growth rates in industrial conflict. According to data presented above, 39% of all strikes in the sector were about remuneration followed by employment issues and working conditions (12% each) and working time (7%) (Desage & Rosankis, 2012). It would be necessary, however, to conduct further and more systematic research on the extent and content of these competitiveness agreements, and how they are linked to strike activity.

Perhaps more significant are the attempts of business to lobby for a further decentralisation and flexibilisation of collective bargaining in order to boost the competitiveness of the French economy. If the far-reaching proposals were implemented, unions and left-wing politicians and labour law experts fear a further erosion of collective bargaining and an undermining of labour law.

Sebastian Schulze-Marmeling, IRShare


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