France Waters Down Proposed Labor Reforms

Liberalizations that could have given especially small businesses some breathing space are canceled.

Prime Minister Manuel Valls and President François Hollande of France attend a meeting with local administrators in Paris, November 17, 2015
Prime Minister Manuel Valls and President François Hollande of France attend a meeting with local administrators in Paris, November 17, 2015 (Elysée)

French prime minister Manuel Valls unveiled watered-down labor reforms on Monday following resistance from inside his own Socialist Party and its trade union allies to more far-reaching plans.

A proposal to allow small businesses to negotiate longer working hours directly with their workers was dropped as was a cap on the compensation judges can award employees who have been found to be wrongfully dismissed.

Both reforms could have given especially small companies some breathing space when the French economy is barely expanding and unemployment has been stuck at around 10 percent since the Socialists came to power in 2012.

“Enough is enough!”

Socialist Party hardliners fiercely criticized their leader, President François Hollande, when he proposed additional labor reforms last month.

“Enough is enough!” they wrote in the left-leaning Le Monde newspaper at the time. The lawmakers said attempts to liberalize the labor market would only “weaken” France in the long term.

On and off

Hollande has oscillated between listening to reformers like Valls and giving in to the far left.

Before calling for deeper reforms in February, he announced €2 billion worth of job-boosting measures in what looked like a throwback to tax-and-spend stimulus policies.

But last year, Hollande’s administration cut business taxes and liberalized Sunday shopping hours as well as intercity transport. Companies were also allowed to opt out of collective bargaining agreements.

Economists and the European Commission have for years urged France to iron out the differences between typically older workers who enjoy full labor protections and youngsters who can only find temp jobs. But such changes are anathema to the old left whose support Hollande needs for parliamentary and presidential elections in 2017.

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