Written by Hilary Barnes
Important negotiations between France’s employer organisations and the trade unions on reforms of the labour market have “reached a dead end“, declared Laurence Parisot, head MEDEF, the most powerful of the employer organisations, on a French radio programme on January 7.
The negotiations have been seen as the the key to one of the most important structural reforms of which France is in need in its efforts to improve the efficiency of the economy.
Organisations such as the European Commission, the OECD and the IMF, who monitor the French economy, all agree that the rigidity of the labour market, where firing is so costly and difficult that firms are very cautious when it comes to hiring, is a serious brake on growth and has contributed to the persistently high unemployment rates over the past 20 years (currently about 10.7%).
The socialist government of President Francois Hollande adopted a process of “dialog social” between the labour market partners. This was supposed to result in a consensus agreement that the government could then turn into legislation. But four months of social dialogue have apparently got nowhere.
The government in fact may be said to have given the game away by declaring that the negotiations were about “security of employment“, which is not quite the same thing as flexibility.
But the employers hoped to obtain agreement to measures that would make collective dismissals or lay-offs less difficult and expensive to carry out and to introduce more room for such measures as reductions in working hours at times when order books are low (widely used in Germany and the Nordic countries).
The trade unions, however, have used the negotiations to demand new restrictions on short term labour contracts, which in the view of the unions are by definition “precarious” jobs.
As it happens, about 80 % of all new job contracts signed in any given year or week of the year are short-term contracts, according to a recent report from the IMF on France.
The unions’ ideal is a world in which all labour contracts are of “non-determined duration” – secure, life time jobs for everyone, if you like.
This, however, is merely to shift the condition known to the French as “precarité” from job seekers and the employed to the firm, especially, of course, for small companies Young job seekers are those most seriously affected.
For small firms, a decision to sign one or two new contracts of non-determined duration is a decision that may threaten their very existence, as firms that took on new labour while order books were still full and prospects looking good in 2007 were to discover.
The unions concede that Utopia is still some way off, but on the way to getting there they think it would be a good idea to place a tax on companies using short term contracts. And that has proved the point at which the employers have baulked (at the time of writing it was not clear whether the other employer organisations are all in line with MEDEF).
We now have to wait and see if the legislation that the government is expected to propose in lieu of a consensus agreement takes the wishes of the employers into consideration as well as the demands of the trade unions.