(Bloomberg Businessweek) -- Just past day 50 since he was elected president, Emmanuel Macron is about to take on a problem that has frustrated his predecessors: freeing up France's labor market.
Macron, whose cabinet Wednesday approved a broad outline of changes to the labor code, wants the authority to negotiate the details over the summer with unions and business groups. The government would then introduce the new framework in September by decree, short-circuiting the legislative process.
After sweeping aside the establishment to claim the presidency and then cementing his dominance with a resounding majority in this month’s parliamentary elections, Macron intends to show France’s often frustrated European partners that he can deliver. With his political capital at a 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,” Finance Minister Bruno Le Maire said in an interview with Le Figaro June 24. “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 May 7.
The most hard-line elements within the union movement are preparing for battle.
“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 CGT, France’s second-largest union, said in a June 25 interview in Humanite. “The unions, including the CGT, are one obstacle he can’t get around.”
General Strike
The CGT has called for a general strike Sept. 12. France’s largest union, the CFDT, said it will wait to see the decrees in September before deciding what steps to take.
The talks focus on three main areas: shifting some elements of labor contracts, such as working hours, from the industry level to individual companies; merging France’s myriad workers councils in companies, and setting upper and lower limits on severance pay to provide more visibility and security for employees and employers. Medef, a business lobby, is pushing for companies to have the right to agree terms with their employees, rather than being governed by industry-wide deals.
The mostly symbolic 35-hour work week isn’t a priority, according to Labor Minister Muriel Penicaud. “I think we have found ways to adapt,'' she said on RTL radio. “It’s not a major issue that requires immediate attention.”
“France needs change, it needs reforms,” Pierre Moscovici, the European Union commissioner for economic affairs, said May 21 on France Inter radio. “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 finance minister between 2012 and 2014 in the Socialist administration of Francois Hollande. In fact, France’s last three governments all tried to liberalize labor law, and all three watered down their plans in the face of union opposition.
Past Efforts
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 labor accords.
After the bill was watered, 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,” said Philippe Waechter, director of economic research at Natixis Asset Management. “Sometimes we never get on to other subjects. France’s image is really at stake in these talks.”
To contact the author of this story: Gregory Viscusi in Paris at gviscusi@bloomberg.net.
To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net.
©2017 Bloomberg L.P.
