Thu, Jan 19, 2012 - Page 10 News List

Sarkozy makes push on labor reform

Reuters, PARIS

French President Nicolas Sarkozy, facing an economic downturn and mounting job losses, urged union bosses yesterday to work with him on job-friendly labor law reforms at a “crisis social summit” he has called three months from an election.

Union bosses attended the meeting at the presidential Elysee Palace, but made it clear they were in no mood to be rushed into a pre-election pact, even if they were keen to make progress on several fronts such as on-the-job training or measure that cut work time and pay to protect jobs in hard times.

“I have got 15 concrete proposals to make on training, jobs, unemployment, part-time employment measures,” Force Ouvriere union head Jean-Claude Mailly said.

“As far as all the rest is concerned, I’m not for my part going to endorse ideas that are economically dangerous and socially dangerous,” he added.

With the euro debt crisis having stripped France of its prized “AAA” credit rating and pushing the economy to the brink of recession, Sarkozy has presented his “crisis social summit” with business and union leaders as a chance to tackle high unemployment.

The unions’ reluctance to be rushed into reforms so close to an elections weakens the prospect of frank discussion on areas economists consider ripe for reform, ranging from restrictive labor laws to the 35-hour work week and the role unions play in pay negotiations.

“We are not going to this summit to negotiate structural reforms,” Laurent Berger, national secretary for employment at the powerful CFDT union, told Le Figaro newspaper ahead of yesterday’s meeting. “Three months before a presidential election is not the time to take impulsive measures.”

Mailly and other labor leaders oppose one major idea being worked on by the government — a German-inspired rise in VAT sales tax combined with a cut in payroll taxes collected to finance the welfare system.

Sarkozy is holding his fire on that until after the talks with union leaders, but Les Echos newspaper said yesterday that his government was likely to plump for a 2 percentage point rise in France’s VAT rate.

French unemployment is close to a 12-year high as Sarkozy’s five-year term nears its end and the statistics offices says the economy is now in what it expected to be a short, shallow recession.

Pressure on Sarkozy intensified last week when ratings agency Standard & Poor’s singled out “labor market rigidities” when explaining its downgrade of France by one notch to “AA+.”

Opinion polls show Sarkozy — who has yet to officially announce his candidacy — in danger of losing the presidential election, but he is racing for two deals he can announce by the end of this month: making it easier for companies to cut working hours in a downturn; and a VAT tax hike that shifts a portion of social welfare taxation from wages to consumption.

Sarkozy was expected to present a summary of his meeting with unions and employers yesterday, but is scheduled to wait until the end of this month to unveil details of his reform proposals.

Critics say Sarkozy has a habit of hurrying into reforms and then watering them down to avoid conflict with unions.

“This is the classic scenario where he rushes into a deal at the last minute without taking enough time for consultation or following through,” economics professor Pierre Cahuc from France’s elite Polytechnique school said.

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