On August 31, the French government held a press conference to announce reforms to the country’s famously Byzantine, worker-friendly labor laws. The nature of the reforms is not news. French president Emmanuel Macron, who was sworn into office in May, ran in part on a reform platform, promising to make the country’s labor system more flexible and employer-friendly.
The announced reforms consist of five measures and are particularly beneficial to small businesses. They should ease the burdensome process of hiring and firing employees and negotiating with workers in France. The reforms will also limit the amount of damages given to wrongfully dismissed employees, along with making other changes.
The reforms tend to favor employers over employees, and they’ve been resisted by many union representatives and workers. Last Tuesday, France’s second-largest union — the CGT, which grew out of the Communist Party — led a general strike and protest that drew between 223,000 and 400,000 people, depending on the source of the estimates.
Whatever the actual number, last week’s demonstrations were relatively tame by French labor-protest standards. As Bloomberg points out, the CFDT and Force Ouvriere, France’s largest and third-largest unions respectively, did not take part in the protests, saying that “they will wait to see the [labor reform] decrees in September before deciding what steps to take.” This hints that some powerful unions may make concessions to Macron.
At this stage, many politicians and union leaders are unwilling to do more than hint at their positions on the measures. This isn’t surprising given the divisiveness of the topic, which some call the third rail of French politics. Bloomberg explains that one traditionally radically left union, FO, “has been treading a fine line, denouncing the bill in press releases and holding a non-binding vote against it, but also refusing to call for strikes and protests.” To take another example: The Associated Press quotes MEDEF, France’s largest employer’s union, as proclaiming that the reforms are “interesting” — perhaps the most noncommittal, uncharged descriptor anyone could use.
Finally, at the press conference announcing the measures, Prime Minister Edouard Philippe said, "Nobody today can seriously say that our ... labor law favors recruitment." While it is true that France’s 3,000-plus-page labor code — which “covers everything from wage negotiations to standards for ventilating offices” — isn’t known for buoying the spirits of prospective employers, Philippe’s observation is hardly a strong justification for, or endorsement of, the reforms he was unveiling.
There is at least one prominent French public figure who isn’t walking on eggshells. President Macron has been unabashed in his disdain for those who oppose the reforms. In a speech in Athens earlier this month he described his reforms’ opponents as “lazy.” The CGT leader called this characterization “scandalous,” and one retired French worker described it as “grotesque, absolutely objectionable.” Many protesters have co-opted the word lazy as a rallying cry, and polls show that Macron’s popularity has fallen to 40 percent. When asked last week if he regretted the comment, Macron responded: “We cannot move forward if we don’t tell it like it is.” (It is true that there are other reasons for Macron’s declining popularity, including my favorite controversy: In his first three months in office, the president reportedly spent about $31,000 of taxpayer money on makeup used to enhance his matinee-idol looks.)
Despite the slipping poll numbers, Macron has in many ways been politically astute during the reform process. CNN says that, far from ramming the measures down the throats of the people, the “government's plans were hammered out following weeks of meetings with union representatives.” The New York Times confirms that the “Macron government went to great lengths to consult with everyone whose interests would be affected by the changes, holding more than 100 meetings since May to discuss the different provisions.”
Moreover, since his party holds a majority in Parliament, that body gave Macron the power to advance the labor reforms by executive orders. This autocratic move may be a contributing factor in his declining popularity, but there’s no doubting its effectiveness. CNN explains that the orders “will be presented to the cabinet of ministers for adoption on September 22 and come into force in late September.”
The New York Times says that Macron’s labor changes have “the potential to radically shift the balance of power from workers to employers” in France. For now, they will only affect private workers, but workers in both the public and private sectors are worried. According to The Guardian, state workers actually made up the majority of protestors in last week’s CGT protests. One told The Guardian, “My grandparents and great-grandparents fought to have social security, to get rights which are now being stripped away. This is about protecting the French social model.”
For his part, Macron sees the reforms as necessary to address the country’s tenacious unemployment, which is stuck at around 10 percent overall and 20 percent for young people. They should also spur economic growth, currently an unenviable 1.4 percent according to the IMF.
Significantly, the reforms are also being implemented to lure foreign investors, many of whom are repelled by the country’s worker protections despite the country's many attractions. It's worth remembering that despite its high unemployment and low growth numbers, France is still the number two economy in the 19-member eurozone. Furthermore — and contrary to popular perception — French workers are highly productive, ranking seventh in the world according to OECD numbers, which puts them above both Germans and Britons.
As the Associate Press explains, Macron’s measures should enhance France’s appeal by making it easier for employers to fire staff, in particular by allowing direct negotiations between the workers and their employers. In addition, “French subsidiaries of multinationals need no longer justify firings based on the international economic climate. If the company is performing poorly, it can now use France alone as its reference to justify the layoffs.”
There’s another element of Macron’s reform project that could bring more foreign investors to France: possible changes to the country’s two-tiered labor market. Bloomberg explains that most employees in France work under a contrat a duree indeterminee (CDI) or under a contrat a duree determine (CDD). CDIs strongly protect workers, whereas CDDs are for temporary contracts of 18 months or less. The two contract options provide little in the way of options for French employers — they are either totally committed to an employee under a CDI, or can only employ a worker on a short-term basis under a CDD, even after investing significant training and other resources in him or her.
There is a third type of French contract that’s only available in the construction industry, known as a CDI de projet, or project-based CDI. Bloomberg describes the project-based CDI as a hybrid of the CDI and CDD, and that “employers have long sought” to expand its use beyond the construction industry. The project-based CDI “is flexible and reduces [employers’] risk of being stuck with more employees than they need (or facing a wrongful termination award from France’s notoriously anti-employer courts).” Bloomberg adds that “Macron and his supporters are not trumpeting their bid to expand the project-based CDI, and few observers seem to have noticed it. But it could prove the most transformative element of their reform.”
In the end, it’s understandable that French workers are worried about the effects of ceding protections. But making those concessions could provide real benefits to workers in the long run. Project-based CDIs, for example, aren’t as worker-friendly as CDIs, but if they’re expanded to all industries they should significantly reduce the built-in uncertainties of short-term CDD contracts. Perhaps most importantly, the reforms will surely make France more attractive to foreign investors, especially given Brexit-related uncertainties in the UK, the traditional European expansion target for US companies. If multinationals do expand to France in significant numbers, some evidence suggests that productivity, and wages, will increase.