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Macron's labor reforms less controversial than expected

August 31, 2017

France's latest plans to reform the labor market don't seem to trigger a huge backlash from the country's unions. Economists say that's because they don't go far enough.

Frankreich Demonstration Arbeitsrecht
"This isn't a protest, it's a zoo!!" At this pro-union event in June, demonstrators in Paris made their displeasure with the brouhaha over Macron's proposed reforms knownImage: picture-alliance/dpa/C.P.Tesson

France's new government has published the details of a key labor market reform aimed to get the economy back on track. The expected outcry from most of the country's traditionally rather feisty unions has failed to materialize. But economists say this is largely down to the reform plans not going far enough.

The country has a history of failed labor market reforms. The latest attempt in line by former Socialist President Francois Hollande in 2016 was met with months of demonstrations and strikes. He had to considerably water down his plans of making the labor law more flexible.

But President Emmanuel Macron seems to think that this time is the charm. He sent Prime Minister Edouard Philippe to make this point in Thursday's press conference on the reform. "We have from the beginning and very clearly stated how we would proceed and obtained a large majority for our plans in the legislative elections," he said adding that the government had a clear mandate to "transform" the labor market.

French economic growth has only recently picked up and is likely to reach 1.6 percent this year. But the country's unemployment rate remains stubbornly high - at around ten percent in general and over 20 percent among the young.

Read more: What are Macron's labor reforms?

Measures in favor of small and middle-sized companies

The 36 measures announced on Thursday are supposed to change that. The focus is on making life easier for small and middle-sized companies. They will have more leeway when it comes to negotiating working conditions without going through the unions.

Another key part of the reforms is the introduction of a cap on damages paid to employees that have been laid off. They will be limited to a maximum of 20 monthly salaries if an employee has worked for a company for 30 years.

The reform plans have, unsurprisingly, encountered some opposition among unions. Force Ouvriere's (FO) Michel Beaugas told DW the limit on damages was "like a license to lay off people at a bargain price."

Catherine Perret from the CGT, France's far-left and most radical union, said in an interview with DW that the plans marked "the end of the working contract, as employees would in the future have to either agree to the company's terms or be laid off."

"What's more, international companies can now fire employees in France, because their French subsidiaries are making losses. Beforehand, such groups had to base their decisions on their international results. This will most certainly trigger a huge wave of layoffs," she added.

Read also: Macron meets resistance to labor reforms in eastern Europe

Frankreich Marseille nationaler Streik Demonstration
Macron's Socialist predecessor Hollande had to contend with massive shows of discontent from unions, such as this day of strikes in Marseille in June 2016Image: picture-alliance/AP Photo/C. Paris

Resistance seems to be confined

And yet, resistance to the reform plans seems to be largely confined. The CGT is planning a day of protests on September 12. Only one other small union, the CFE-CGC, has so far confirmed that it would join the larger union in taking to the streets.

FO and the more conciliatory CFDT are saying they prefer continuing the dialogue with the government.

The latter has been in constant touch with the unions over the past few weeks - to talk through the reforms and take into account some of the unions' suggestions. That appears to have schmoozed them to the point that they don't even seem to mind the government implementing its plans through executive orders and thus circumventing a parliamentary debate.

Economist Philippe Crevel, head of the think tank Cercle de l'Epargne, is putting the lack of major backlash also down to the fact that the reforms are steering clear of the most controversial topics.

"Macron is stopping short of reducing employers' charges, of cutting down the amount of leave French employees have and of getting rid of the 35-hour week," he told DW.

"He is basically being an astute communicator and trying to show that he can indeed carry out a reform without triggering a major backlash."

"But these plans don't go far enough to get the economy back on track."

Crevel added that the President was setting the tone for more thorough reforms planned for next year.

Read more: Macron's first 100 days filled with tests

A change in the French mindset

AXA Senior Economist Maxime Alimi says the government will also have to reduce unemployment benefits and improve its educational system if it wants to get the country back on track.

But he thinks France has nevertheless made progress - when it comes to its mindset.

"Some of the measures like the cap on damages were also included in the 2016 labor market reforms," he opined. "And yet, they don't seem to trigger the huge backlash we saw last year... People now seemingly understand that France needs to be reformed to become competitive again."

Indeed, 56 percent of the French think that France's rigid labor law is preventing companies from creating jobs, according to a recent poll. However, only 41 percent of the survey's respondents trust Macron will be able to carry out the necessary reforms.

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