French President Emmanuel Macron was yesterday to take a major step toward freeing up France’s labor market, a task that proved beyond his predecessors from across the political spectrum.
Macron’s Cabinet was to approve a broad outline of changes to the labor code and would ask parliament for the authority to negotiate the details over the summer with unions and business groups. The government plans to introduce the new framework in September by decree to avoid getting tangled up in a long parliamentary debate with numerous amendments.
After sweeping aside the establishment to claim the presidency and then cementing his dominance of the political landscape with a resounding majority in this month’s parliamentary elections, Macron wants to show France’s often frustrated European partners that he can deliver.
With his political capital at an all-time high and the economy coming off the strongest six-month period of growth since 2010, he might never get a better chance.
“The labor market reform is the mother of all reforms, both from an economic and social point of view,” French Minister of the Economy and Finance Bruno Le Maire said in an interview with newspaper Le Figaro on Saturday last week. “While the context is favorable, we must not waste a minute.”
Loosening France’s labor code was a central campaign issue for Macron, and he began negotiations with unions and business leaders as soon as he claimed the presidency last month, even before he had secured his majority in parliament.
However, despite his mandate from the voters, the most hardline elements within the union movement are preparing for battle all the same.
“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,” Philippe Martinez, head of the General Confederation of Labor (CGT), France’s second-largest union, said in an interview in newspaper L’Humanite on Sunday. “Macron has blown away the political framework and the traditional parties. The unions, including the CGT, are one obstacle he can’t get around.”
The talks focus on three main areas: limiting severance pay and other costs for companies firing staff; simplifying workers’ representation councils; and deciding who should negotiate wage deals.
The Movement of the Enterprises of France (MEDEF), a business lobby group, is pushing for companies to have the right to agree to terms with their employees, rather than being governed by industry-wide deals.
“France needs change, it needs reforms,” European Commissioner for Economic and Financial Affairs, Taxation and Customs Pierre Moscovici said on France Inter radio on Wednesday last week. “It needs to be made more dynamic and that’s what we expect from the president.”
Moscovici himself failed to make much progress on the labor market when he served as French finance minister between 2012 and 2014 in the Socialist administration of former French president Francois Hollande.
France’s past three governments all tried to liberalize labor law, and all three watered down their plans in the face of union opposition.
However, the French labor code is still too complicated and many companies are afraid to hire because of the difficulties in shedding staff if their revenues dip, MEDEF president Pierre Gattaz said.
Macron, as economy minister under Hollande, had worked on earlier versions of last year’s law that went much further in easing restrictions on firing and negotiating own labor accords. After the bill was watered down, Macron quit the government to set up his own political movement.
“When I speak to foreign clients, the first question usually they have is whether France will reform its labor code,” Natixis Asset Management director of economic research Philippe Waechter said. “Sometimes we never get on to other subjects. France’s image is really at stake in these talks.”
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