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Four ways France will 'simplify' jobs market

Ben McPartland · 9 Jun 2015, 13:23

Published: 09 Jun 2015 13:23 GMT+02:00

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François Hollande has pinned his future as president of France on a promise to bring down unemployment.

But up until now he has failed miserably, with the latest unemployment figures showing yet another jump and the upward curve shows no signs yet of dipping.

Economists and business leaders have long argued the problem lies with France's stiff labour laws that often dissuade employers from taking on staff as they fear they won't be able to fire them.

This week Hollande and the French PM Manuel Valls put their heads together and came up with a series of measures.

Valls revealed those changes on Tuesday in a reform labelled a “jobs act a la française”, that is aimed at making it easier for small and medium sized firms to take on staff.

The reforms, which totalled 18 in all, will "lift obstacles and uncertainties, and will simplify life," Valls said.

Although the PM kept his promise not to touch the “fundamental aspects of the employment contacts”, he did announce changes that should benefit both firms and the unemployed.

Here’s a closer look:

Temporary contracts can be renewed twice

Employers and employees alike have long complained about the fact that temporary contracts, known as CDDs in France, can only be renewed once. This has forced companies to say goodbye to staff if they have been unwilling to take them on on a permanent CDI contract.

Valls has agreed to loosen the rules a little and allow a CDD, which is subject to strict rules, to be extended twice - although the maximum amount of time an employee can be employed on temporary contracts will remain at 18 months.

In France around 85 percent of new hires are given CDD contracts.

Bonus for employing first member of staff

One of the toughest steps to take for a small company in France is to hire that first member of staff as it takes them into a whole new world of regulations and administration. In a bid to ease the pain Valls is offering the country's 1.2 million small companies with no employees a bonus of €4,000, which will be paid out over two years (€2,000 per year).

It will apply to CDIs and CDDs over 12 months signed before June 2016 and for companies which have never had an employee or which haven’t had one in the last 12 months.

SEE ALSO: Hollande enters money-time over jobless pledge

Limit compensation for lay-offs

One of the biggest fears among business owners in France is having to pay out large sums in compensation if they are taken to industrial tribunal. This not only means losing money but also the time spent going through the process.

The fear is naturally heightened for smaller companies. Valls therefore has decided to put a ceiling on the compensation handed out for unfair dismissal.

The limits will be set depending on the size of the company and how long  the member of staff was employed for.

The measure won’t concern big companies and will not apply to serious accusations like harassment and discrimination.

Staff thresholds

The French government has also agreed to make slight changes to staff thresholds or “seuil sociaux”.

These require companies who have more than a certain amount of staff to be subject to certain regulations and tax requirements. For example companies with more than 49 on their payroll are forced to offer union representation and set up a worker’s council, known as a committee d’entreprise.

Valls has agreed to freeze the impact of crossing the threshold of 50 staff for three years. The regulations and tax requirements that kick in when companies have nine and ten staff will now only apply when there are 11 employees.

Story continues below…


For Christian Person, CEO of French consultancy firm Umalis, these measures"couldn't come soon enough."

"It is the essential flexibility that our small businesses require to adapt to an increasingly competitive global economic environment," he said in a statement.

He said government had "procrastinated" for too long, but welcomed the move which would "allow us to overcome the fear of hiring".

In a statement the vice-president of France's leading business union Medef, welcomed the reforms.

Thibault Lanxade applauded "the government who acted and proposed significant measures to simplify the life of smaller companies".

Unions like Force Ouvrière criticised the reforms accusing the "liberal" Socialist government of further pandering to businesses. 



Ben McPartland (ben.mcpartland@thelocal.com)

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