French Socialists Enact Labor Reforms by Decree

Socialist Party leaders bypass opposition from within their own party to liberalize the French labor market.

French president François Hollande delivers a news conference in Brussels, September 23, 2015
French president François Hollande delivers a news conference in Brussels, September 23, 2015 (European Council)

For the second time in as many years, France’s Socialist Party is enacting labor market reforms by decree, bypassing parliament.

Prime Minister Manuel Valls defended the unusual move on Tuesday, saying, “the country must move forward.”

Left-wing deputies booed Valls’ speech while hundreds of thousands of students and trade unionists demonstrated against the reforms outside.

But Valls and his boss, President François Hollande, appear convinced the reforms are not only necessary but could help them politically.


The measures make it easier for firm to lay off workers and give especially small companies more flexibility to negotiate wages and conditions directly with their employees.

Current law makes it almost impossible to fire workers on long-term contracts, which helps explain why short-term and non-contracted work has skyrocketed.

Current law also gives trade unions a role in salary negotiations.

Hollande and Valls hope that changing this will encourage more hiring at a time when unemployment is stuck at around 10 percent, the same rate as when Hollande took office in 2012.

The European Commission, the Organization for Economic Cooperation and Development, the International Monetary Fund and scores of independent economists agree. They have all urged France for years to liberalize its labor market.


Many in the ruling Socialist Party are wary of what they see as a weakening of France’s social model. They are led by Martine Aubry, the architect of the 35-hour workweek and one of Hollande’s rivals in the 2012 left-wing primary.

French media reported that the government was around thirty votes short of the number needed to pass the bill.

Student groups said they feared the reforms would make it harder for young people to find a job, although they are designed to do the opposite.

Youth unemployment is close to 25 percent. Many young workers are stuck in a cycle of low-paid internships and short-term contracts.

The government did give in somewhat. It withdrew a cap on the amount companies must pay for unfair dismissals and also took out a reform that would have allowed small- and medium-sized companies to introduce flexible working hours unilaterally.


Hollande and Valls previously used the decree law to enact reforms in early 2015 that liberalized shopping hours and intercity transport.

The possibility for companies to opt out of collective bargaining agreements was also introduced at the time.

Hollande seemed to reverse himself earlier this year when he announced stimulus measures to boost employment and reshuffled his cabinet to give leftwingers more prominent positions.

Those gestures did little to restore Hollande’s credibility on the left. He seems to have calculated that allowing Valls, a reformer who is more popular than the president himself, to continue his program is the politically more expedient thing to do.

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