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'Reforms are not the problem in France, it's injustice'

Ben McPartland · 10 Jul 2014, 15:03

Published: 10 Jul 2014 15:03 GMT+02:00

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“My obsession is movement, and reform. I want to free France from these blockages”.

This was just one of many soundbites uttered by French PM Manuel Valls in recent days, on his favourite topic of labour-market reform, which he wants to make more “supple” and “effective”

“Do we move or do we not move? Do we reform or do we not reform?" was another Valls line uttered at a recent social conference that was boycotted by several trade unions.

Those words will be music to the ears of business leaders in France as well as many foreign observers, and finance chiefs in Brussels, who have been pressuring Paris to restructure the labour market.

Valls, considered something of a French Tony Blair for his pro-business stance, believes the country needs some major reforms to make the highly regulated labour market more flexible with the aim of encouraging companies to recruit.

The PM has even suggested France’s almost sacred 3,000-page labour code could do with simplification.

He has his backers, notably France's employers groups, known as the "patronat" and in particular the heads of small and medium businesses, some of whom protested in their underpants this week demanding changes to the “unreadable and incomprehensible” labour code.

(Members of the Déplumés movement protest in their underpants this week)

 Speaking with just his underpants and a T-shirt on, Julien Leclerq, one of the leaders of the protest movement named the Déplumés (featherless) said: "I studied law and I still don’t understand it (the labour code).”

"Companies are not recruiting because they are scared of the labour code. It acts as a real brake on hiring," he said.

“We are fighting for the government to lower payroll charges, not so we can get a new swimming pool or a new car. It’s for our businesses, so we can create employment,” Lerclerq added.

'France's problems are not because of the labour code'

But not all economists, especially in France, agree with the Brussels line that France’s labour market needs an overhaul.  

“Contrary to what you might read in The Economist magazine, France has been making reforms for the last 15 years,” Jean-Claude Barbier from the Sorbonne tells The Local. ”It’s just not true to say France’s labour market is inflexible. Yes, there are some parts where reforms can be made but other areas are very flexible.”

Barbier points to last year’s historic deal between employers and trade unions that gave more flexibility to employers, as well as more protection to employees, a key concern of France's unions.

The accord, dubbed the “flexisecurité” agreement, allows employers to cut working hours and salaries during hard times as well as making the process of laying off staff both less costly and less complicated.

On the other side, employees gained more rights, including better health cover and unemployment benefits.

“The main problem is not that the labour market is inflexible, it’s that there’s a problem of inequality and social justice, where some workers have advantages and perks and others don’t,” Barbier said. 

Eric Heyer from the French Economic Observatory goes even further, insisting it is misleading to place all the blame for the record unemployment and struggling economy on the rigid labour market

“Before the economic crisis of 2007 France had seven percent unemployment, with the same labour code we have today and the 35-hour week etc, so it’s not to blame for the fact the unemployment is now at ten percent.

“It’s not the labour code that has brought growth to a halt,” Heyer adds.

Heyer believes the PM should look towards ending the policy of austerity rather than tackling the labour code.

'Real reform is unlikely, it's too late'

Whether the labour market could do with an overhaul or not, Heyer believes the current climate of  grogne social (social discontent) which has seen numerous strikes in recent months, plus the unpopularity of the president and the growing number of rebels within Hollande’s party, means Valls can bang the drum as much as he likes, but in reality little will happen.

Other economists in France are of the same opinion.

“It would be very difficult and complicated for Valls to implement real reforms,” Gérard Grunberg from France’s National Centre of Scientific Research told The Local. “I am not sure the government has the strength or the means to implement real reforms.”

“The president is weak, he has no real authority. Manuel Valls has more authority but he’s not the president and it would be difficult for the government to get the votes they would need in parliament.”

As well as taking on the labour code Valls also wants efforts made to double the number of apprenticeships, standardize part-time work as well as look at the issue of “social thresholds” (seuils sociaux) which impose a series of obligations on companies depending on the number of people they employ.

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For example any company with 50 or more staff must have a work’s council (comité d’entreprise) and union representatives and sign up to numerous other labour agreements that benefit employees.

Bruno Cautrès from Sciences Po’s Centre of political research (CEVIPOF) Cautres says progress may be made “on these small things” but he believes it's already too late for any major reform of the labour market.

“I can’t see anything happening. We are already in the middle of 2014 and in less than two years everyone will be concentrating on the next presidential election,” Cautrès says.

Unfortunately for President François Hollande, his chances of standing in, let alone winning that 2017 election are likely to hinge on his prime minister’s ability to push through change.

Valls was tasked by Hollande to flesh out his much-heralded “Responsibility Pact”, upon which Hollande’s presidency seems to hinge.

Six months since Hollande announced the pact, which offers businesses €40 billion ($54 billion) worth of cuts to taxes and social benefit charges in exchange for a pledge to create some 500,000 jobs by 2017, the details still remain very vague.

It is not clear how the government will ensure that companies do not simply pocket the tax breaks - an issue that some trade unions as well as the French public are increasingly unhappy about.

Business leaders are frustrated at the lack of action.

"It's been six months and in that time nothing has advanced, there's no concrete measure to relaunch employment in France" said Déplumés' Leclerc, still in his underpants.

Despite his quest for reform Valls may just have to accept his “obsession” might not be satisfied.

Ben McPartland (ben.mcpartland@thelocal.com)

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