French Employers, Unions Reach Labor Agreement

Protest Against Retirement Reform from Marseille, 2010.Photo:

Protest Against Retirement Reform from Marseille, 2010.

In an unprecedented and surprising move, French employers and labor unions reached an agreement on Friday, January 11 that is expected to bring major reforms to a heavily burdened and recession-bruised French labor market.

Reuters reports that the proposed reforms will address concerns “often cited by credit ratings agencies” that the French work force is fundamentally paradoxical and unfair, with stringent unions who have effectively set up a system of those who enjoy very comfortable job security and those who virtually have none.

France is notorious for the bureaucratic obstacles employers face when wishing to terminate a worker, creating a society in which unemployment becomes a cyclical force for many, including (and especially) young adults.  An estimated 80% of all new hires in France are working on a temporary contract of less than one month, and a quarter of all 18-24 year-olds do not have or cannot find work.

After three months of negotiations, employers will now enjoy a greater ability to control their workforce, as their layoff compensations will be capped and wrongful termination disputes will only be valid for 24 months instead of the previous allotment of 5 years. Employers will also be able to cut employees’ wages and work hours temporarily during slower periods.

Unions, meanwhile, will enjoy greater representation on company boards, more comprehensive health care coverage, and an increase in welfare charges paid by employers for temporary contracts.

President François Hollande responded enthusiastically to news that the agreement had been reached, indicating the proposals will move along in the legislative process and hopefully be enacted into law by May.  With an approval rating at just 37%, Hollande could potentially benefit from the agreed changes and about-face his image under the flag of reform.

But before the agreement appears first before the French cabinet and then the nation’s parliament, it must be formally signed by a majority of France’s unions.  Three of the five are expected to fix their signatures later this week, with the remaining two still bitterly opposed to the proposals.

“It’s a dark day for employees’ rights,” said Stephane Lardy of the Force Ouvriere syndicate.

Hollande’s administration is nevertheless praising the compromise as proof of the importance of social dialogue in shaping national economic policy.  Should the agreement lead to an improvement in France’s economic growth (which has hovered at zero for the past year) and job creation, there may be some badly needed redemption for the “Mr. Normal” in Paris’s Élysée.

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