UNDERSTANDING THE FRENCH LABOUR REFORM: THE LAST RADICAL ATTEMPT TO INVERT HIGH UNEMPLOYMENT RATES

by Julian Ignacio Canlas

On 9th and 31st March, a series of protests unfolded throughout France. Students and workers came together to reject the reform on the labour code proposed by the current French Minister of Labour, Myriam El Khomri. But what does this reform — the El Khomri law — really represent? And, with 71% of French people against the El Khomri law, why is it considered to be detrimental for wage earners?

The El Khomri law came during a period of political emergency. François Hollande has stated that he would not run in 2017 if he fails to achieve one of his main goals when he became president: to invert the unemployment curb. France’s unemployment rate has remained above 10% in the last 5 years (above average in the EU’s 28-member bloc, especially when compared to UK’s unemployment rate, which decreased from 8.5% to below 5.5%). French youth unemployment is at an even more frightening statistic, currently at 26%. At the same time, a labour reform in France has been long overdue, with French media citing how other EU countries have done similar, successful labour reforms, such as Italy’s recent Jobs Act.

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The French labour code—known for its emphasis on workers’ rights, including the 35-hour workweek model and an extensive unemployment benefit system—has been criticised for being too rigid and complex. Boasting 10,000 articles, the code contains an excess of information that even experienced law-makers have a hard time understanding  and that are inaccessible to those it is aims to represent: workers. The El Khomri law aims to simplify the main talking points of the code in order to provide more flexibility by revising areas to encourage job creations and simpler recruitment processes. In short, this aims to make the labour code less important when it comes to negotiating about workplace conditions, such as on salary and working hours, shifting the current dynamic from its current legislative vantage point to company-level decisions.

Currently, permanent contract workers are almost impossible to dismiss except under a 2specific set of circumstances stated in the labour code. While at the moment workers can only be dismissed on economic grounds due to technological changes or bankruptcy, through the El Khomri law, these would open up to any reason relating to economic problems, such as decrease in profits and relative productivity.

Linked to this is the controversial proposed cap on financial compensation for ‘unfair’ dismissals to 15 months of pay. This has been stated to have a negative impact on hiring, as companies might not get more workers in fears of paying huge sums in litigation cases. However, the watered-down redrafting of the reform has removed this.

Meanwhile, employment benefits would be reduced. This is in part due to the amounting deficit of UNEDIC, France’s current unemployment social insurance agency, which is set to reach £30bn by the end of 2016, making this unsustainable. Workers are currently entitled to up to two years of unemployment benefits that pay up to 80% of their previous salary in the first year and 60% in the second.

…on paper, the El Khomri law seems drastic, even with these changes, France would still have better workers’ rights than most…

Another main goal in the reform is to decrease the bonus rate of overtime pay after the 35-hour limit has been reached.  Right now, there is a 25% increase on the hourly wage for the first eight hours, and then 50% after these eight hours have been reached. There are currently some exceptions to this rule. An agreement could be made between firms and unions to lower the overtime rate, as long as it stays above 10%. The 35-hour workweek and these default overtime rates will remain untouched. However, this reform will allow companies to circumvent previous industry-agreed overtime rates through internal negotiations between employer and employee representatives; if these negotiations were accepted, those against them could be dismissed on personal grounds.

Another one, which has only been recently implemented on 14th March, is the extension of the guarantie jeune, or youth guarantee, from 50’000 to 200’000 young people by 2017. This project offers training and financial protection for around a year to those who are under 26 years’ old, unemployed, and have not been in any type of education or formation in the last six months. This is especially important, when economists from HSBC note that the high number of job vacancies is due to not enough people having the right qualifications.

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These mismatches reflect a lack of mobility of workers and the unemployed but also the lack of employability of a significant part of the labour force, due to an inefficient training system and a large proportion of young people who have no qualifications. The latest PISA results have underlined that inequalities linked to socio-economic background in France are among the highest in all of the OECD.

While, on paper, the El Khomri law seems drastic, even with these changes, France would still have better workers’ rights than most countries in Western EU. Let’s compare France and the UK. While French workers receive overtime bonus, the UK does not, so even 10% of bonus remains a blessing. The UK also only offers up to six months of unemployment benefits, which would still be considerably lower to that in the reform. Finally, in the UK, a company can sack an employee who’s been there for two years for no specific reason.

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So what’s the deal with this violent reaction?

Simply put, people are tired. I think that to consider these protests as merely a reflection of France’s confrontational political culture is at best reductive and dismissive of the tense socio-political atmosphere that has been bubbling in the last few years. Trade unions are angry the attempt to diminish their importance on negotiating overtime rates. Young people feel deprived of the job security the previous generations have enjoyed.

Perhaps this is the last ditch attempt of a president that knows it is too late to drastically shift the unemployment curve by the 2017 elections.

This proposed reform is happening in the midst of an identity crisis within the increasingly multicultural French society, after having recently suffered two terrorist attacks in Paris. Just a couple of days ago, Hollande’s plan to implement a law to have convicted Jihadists stripped of their French nationality was dropped after his own left-wing government denounced the Islamophobic and xenophobic implications, stating that this law would more likely stigmatise French citizens with dual nationality. But perhaps what is most interesting is that a Socialist government would adopt a seemingly center-right wing labour reform echoing that famous Sarkozyan adage ‘Work more to earn more.’ Perhaps this is the last ditch attempt of a president that knows it is too late to drastically shift the unemployment curve by the 2017 elections.

Featured Image: Stéphane Burlot

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