Focus on France Ian Sparks reports from Paris

euRo-RePoRT

Focus on... France

Ian Sparks reports from Paris on the new president’s push for labour reform.

France’s newly-elected president Emmanuel Macron is preparing to tackle ‘the mother of all problems’ that has frustrated every leader before him for the past 50 years – deregulating the nation’s tightly controlled labour market.

After just 50 days in office, Mr Macron is girding himself to do battle with the unions, who are strongly opposed to the loosening of workplace laws.

And before negotiations have even begun, France’s powerful CGT union is already threatening a general strike for September 12 in anticipation of changes they fear could erode the rights of employees.

Macron’s cabinet approved a broad outline of changes to the labour code at a meeting in late June, and won the authority to negotiate the details of reforms over the summer with unions and business groups. The government would then introduce the new framework in September by presidential decree, short-circuiting the legislative process.

Macron’s proposed changes focus on three main areas of labour reform. First, shifting some elements of labour contracts, including working hours, from the industry level to individual companies. Secondly, merging and unifying workers’ councils within companies. And thirdly, setting upper and lower limits on redundancy pay to provide security for both employees and employers.

Finance Minister Bruno Le Maire said in an interview with Le Figaro on June 24: “The labour-market reform is the mother of all reforms, both from an economic and social point of view. While the context is favourable, we must not waste a minute.”

Loosening France’s labour laws was a central campaign issue for Macron and he began negotiations with unions and business leaders as soon as he was elected on May 7. He said he wanted to ‘liberate France’s economic forces’ and transform it into a country of ‘risk-taking entrepreneurs’.

But when it comes to saving some of his country’s ailing industries, observers have noted that he is still relying on France’s timehonoured recipe of using taxpayers’ cash and state-run business to rescue struggling firms.

The most prominent current example is the failing car parts supplier GM&S, which is about to go bust with the loss of 227 jobs in the department of the Creuse – one of France’s poorest regions.

After weeks of seeking a buyer for GM&S, economic affairs secretary Benjamin Griveaux is now planning on bailing them out with 5 million euros of taxpayers’ cash, and a further 5 million euros each from carmakers Renault and PSA Peugeot Citroen.

The solution has already irritated Macron’s free-market economy minister Bruno Le Maire, who said last week: “It’s typical of the French system. A company was set up in the 1970s in the middle of the boondocks to bring activity to a region.There is no industrial network around, there’s only a few big clients for a small company. It’s just not solid.”

Several thousand jobs are also currently at risk at the auto supplier Nobel Plastiques, cigarette maker Seita, the Castmetals foundry in Feurs, and the aerosol manufacturer Aeropharm in Marseille.

After just 50 days in office, Mr Macron is girding himself to do battle with the unions...

union resistance

Meanwhile, France’s notoriously militant union movement are already warning the president he will face stiff opposition to his labour market changes – reforms which his government believes could have saved firms like GM&S car parts.

CGT union boss Philippe Martinez told Humanite newspaper on June 25: “I call on the president to be humble and prudent, and not to think that just because he was elected and has a big majority, he can do what he wants. The unions, including the CGT, are one obstacle he can’t get around.”

Bus Macron does have the support of the employers organisation MEDEF, which is also pushing for companies to have the right to agree terms with their employees, rather than being governed by industry-wide deals.

Pierre Moscovici, the European Union commissioner for economic affairs, said shortly after Macron swept to power in May: “France needs change; it needs reforms. It needs to be made more dynamic and that’s what we expect from the president.”

There are only a handful of examples of successes in tinkering with the labour laws in France’s last three governments. In 2003 and 2005, Jacques Chirac managed to loosen the 35-hour cap on the working week, making it easier and cheaper for companies to add extra hours.

In 2008, Nicolas Sarkozy made it simpler for individual workers to negotiate their own departure. And Hollande’s reforms of 2013 and 2016 made it easier to justify layoffs due to a downturn in business.

Macron, as economy minister under Hollande, had worked on earlier versions of the 2016 law that went much further in easing restrictions on firing and negotiating own labour accords. After the bill was watered down, Macron quit the government to set up his own political movement.

Now the world is waiting to see if Macron can achieve the kind of large-scale reforms that have eluded his predecessors.

Philippe Waechter, director of economic research at Natixis Asset Management, said: “When I speak to foreign clients, the first question they usually have is whether France will reform its labour code. Sometimes we never get on to other subjects. France’s image is really at stake in these talks.” n