External Affairs

France’s Proposed Labour Reforms Are a Litmus Test for Macron

If Emmanuel Macron is indeed able to push through the labour market reform, he would have succeeded where many other French presidents have failed.

French President Emmanuel Macron. Credit: Reuters/Fabrizio Bensch

French President Emmanuel Macron. Credit: Reuters/Fabrizio Bensch

France has a notorious reputation for being ungovernable. On a recent visit to Romania, President Emmanuel Macron said that the French “…hate reform”. It is hardly a surprise, therefore, that Macron’s resolve to reform the strictly regulated Labour Code (Code du Travail) of his country, one of the EU’s most protective welfare states, has met with opposition.

According to a survey that Ifop, the leading French market research and opinion polls institute, conducted for the weekly Journal du Dimanche, Macron’s popularity has witnessed a steady descent since June, with only 40% of French voters expressing satisfaction with his performance since he took office. The president has an autumn of challenges ahead of him; the CGT (Confédération Générale du Travail), one of the big five confederations of labour unions in France, has called for a nationwide strike on September 12 and subsequently one on September 23, a day after the reform is to be signed at a meeting of the council of ministers .

France’s long history of street protests is well known. In 2016, former President François Hollande faced harsh opposition to the El Khomri law, the controversial labour reform that he forcibly enforced and was, thereafter, obliged to retract following large-scale demonstrations all over the country.

Labour Code: Time for reformation?

France’s highly-contentious Labour Code is a 3,324-page long comprehensive framework that delineates the rights of employers and employees. While labour unions regard the protections it offers sacrosanct, employers bemoan its rigid nature, saying it makes it very difficult to hire new talent and lay off non performers. Little wonder then, that this rigid Labour Code has proved to be a challenge for job generation in the EU’s second largest economy. Today, the country faces an unemployment rate of 9.5%, with one out of four young people under the age of 25 years without gainful employment.

Macron is resolutely set to overhaul the regulation-laden Labour Code, which was part of a series of measures that were put in place to bring order to the chaotic situation that followed the French Revolution. The nuanced language of the Code conveys, albeit in an implicit manner, the inevitable vulnerability of the worker to the aggressive market forces.

Macron, a former investment banker, is seen as a pro-business president whose objective is to revitalise the economy and create an ecosystem that is conducive for doing business in. The proposed modifications to the laws on working, hiring and firing conditions have been welcomed by Medef, France’s principal employers’ union. They believe that the reforms will remedy the inertia that has plagued French economy for a number of years now.

German-style labour negotiations, wherein workers and employers are free to engage in negotiations with minimal interference from labour unions, global performance of firms not to be used as a parameter in lay offs of employees, a set scale for damages for employees who are dismissed wrongfully, modifications to short-term work contracts; and reduction of red tape with regard to small and medium enterprises are the five key points of the proposed labour code reform.

The reform has a strong neoliberal overtone and resembles the German labour reform carried out in 2004-05. If Macron is successful, he would have forced his country to make a paradigm shift which is more in keeping with the Anglo-Saxon model.

A protester carries a flare through teargas during a demonstration against French labour law reform in Nantes, France, May 19, 2016. Credit: Reuters/Stephane Mahe/Files

A protester carries a flare through teargas during a demonstration against French labour law reform in Nantes, France, May 19, 2016. Credit: Reuters/Stephane Mahe/Files

An opportunity and a challenge

Thanks to the absolute majority that his party enjoys in parliament, Macron is in a better position to push through the reforms than any of his predecessors. The reforms will be passed through a special procedure in parliament to avoid debate and amendment. What would remain is the sign off from the administrative high court; that done, the reform will become law.

While they have expressed their disappointment, many labour unions like the reformist CFDT have, at least for the moment, desisted from lending support to the call given by the CGT for massive street protests on September 12. However, it would be foolhardy to underestimate the power of France’s street demonstrations.

Macron’s make or break moment

If Macron is indeed able to push through with his country’s labour market reform, he would have succeeded where many other French presidents have failed. Macron would be able to give his agenda the momentum to move forward and be able to put France on the road to economic recovery.

By addressing the problem of unemployment, Macron would, to a certain extent, have also addressed the challenge of the growing populist sentiment in France. The Front National, the right-wing party, has garnered considerable voter support on the grounds of economic inequality.

Macron’s success in pushing the labour reforms through also has a bearing on his ambition to revitalise the EU based on deeper financial and political integration of the Eurozone. This will be possible only if Macron is able to reform France first.

Macron is a man of many firsts. From being the youngest president since Napoleon to winning the presidential elections without an established party, he has been seen to break away from tradition. His belief in “political heroism” could very well stand him in good stead to overcome yet another challenge that awaits him later this month.

Shivali Lawale is the director of the Symbiosis School of International Studies.