French Socialists Shy Away from Labor Reforms

Fearful of splitting their base, French ruling party leaders shy away from liberalizing the labor market.

French president François Hollande speaks with his economy minister, Emmanuel Macron, in the Elysée Palace in Paris, September 26, 2014
French president François Hollande speaks with his economy minister, Emmanuel Macron, in the Elysée Palace in Paris, September 26, 2014 (Elysée)

Labor reforms unveiled by French prime minister Manuel Valls this week shy away from weakening protections cherished by his Socialist Party and its trade union allies, including the country’s 35-hour work week and indeterminate-term contracts.

“Our principle is to bring more flexibility but not less protection,” Valls said.

His plan tinkers around the edges of the jobs market. It would let firms negotiate working conditions with their employees rather than trade union representatives, for example, and allow them to opt out of some of the thousands of national work regulations that are especially onerous for small companies.

But to the dismay of employers, key recommendations from labor experts have been thrown out.

One was to push up the threshold at which overtime pay kicks in to forty hours per week, as is the case in most other European countries.

Another involved ironing out the differences between typically older, insider workers who enjoy full labor protections and younger outsiders who can only find temp jobs.

Temporary work contracts now account for 80 percent of the jobs created in France.

With unemployment still over 10 percent — where it has been since President François Hollande was elected in 2012 — the country could desperately use more flexibility. It has been advised by the European Commission and other international institutions like the Organization for Economic Cooperation and Development to simplify layoff procedures and make hiring less expensive.

Excessive regulations and high social security contributions from employers hinder labor mobility, they say, and add to France’s labor costs which, at €34 per hour, far exceed the European average of €23.

But Socialist Party leaders are eying regional elections later this year and a presidential race in 2017. They can ill-afford to split their base when the polls suggest they will lose in a three-way fight with Nicolas Sarkozy’s Republicans and Marine Le Pen’s far-right Front national.

Even the relatively minor changes proposed by Valls could run into left-wing opposition.

When the prime minister, seen as trying to pull his party to the center, wanted to lower business taxes, introduce competition in intercity transport and allow stores to open on more Sundays in the spring, Hollande had to use emergency powers to bypass parliament where a Socialist rebellion could otherwise have thwarted the effort.

Martine Aubry, one of Hollande’s opponents in the 2012 Socialist Party primaries and the architect of the 35-hour workweek, sneered at the time, “Has the left now got nothing else to suggest for the organization of our lives than a Sunday walk in a shopping center?”

Voters are ahead of the party. A poll this week showed 70 percent favor getting rid of the 35-hour work week. Most French already work more hours anyway: 37 per week on average last year, according to the OECD.

Leave a reply