Europe France Marko Gombac Security, Trade and the Economy Uncategorized

The EU’s Swan Song: Labor Reform in France and the Divisiveness of Belt-Tightening

Read Part 1 of EU’s Swan Song: Loans, Lies, and Lessons in Greece 

The use of the Controversial article 49.3 by the French President François Hollande on May 10, 2016, allowing the circumvention of parliament to bring in controversial labour reforms has resulted in riots across France over the past month. The reforms, aimed at targeting France’s troubled labour market, which has maintained an unemployment rate over 10% for years, are also serving as a vehicle for the Hollande government to stick to its promise of labour reform. Hollande, who promised the measures would bring 500,000 new jobs in a speech given to trade unions and business leaders in January, 2016, and that his will be the government that does not back down from the tough measures needed to fix French unemployment.

The reforms have sparked violent protests in Paris and across France, with thousands marching in the streets, masked rioters throwing petrol bombs and police firing tear gas in the crowded streets. The protesters are mainly composed of and lead by students, trade union members, and public service workers who claim the reforms are repressive and represent an attack on all the rights, benefits, and social protections for which previous generations have fought so hard. Hollande’s use of Article 49.3, a hotly contested element of the constitution, has elicited cries that the government is taking increasingly authoritarian measures and highlights what some claim to be the ‘democratic deficit’ of the EU.

These claims may be well founded fears, but it is important to remember that France enjoys an exceptional standard in the world when it comes to social protections and job security – one that has clearly reached its expiration date as a viable governance system during the recession, especially when many of France’s neighbours had started labour reforms much earlier. In fact, the French have enjoyed an unparalleled precedent in their 35 hour work week, one of the lowest in the world, along with a robust contract system that protects jobs. The French labour contract system heavily uses the CID contract, or the Contract Indetermineé, which requires an open ended employee-focused work contract that imposes strict fines and arduous paperwork for dismissals of workers. The reforms make these contracts more flexible, allowing employer’s the ability to hire and fire according to loosely termed ‘economic’ reasons (which could be anything from a dip in company profits or more general economic downturns). The same procedures allow   employers to give less notice for dismissals and extend working hours, without overtime pay in some cases, up to 60 hours per week in ‘exceptional circumstances’.

While many in other parts of the world already live under this system of increased job insecurity, the French have benefited from a long tradition of heavy social protections, and are thus understandably angry over the reforms to a system they have known their whole lives. However, as Jean Marc Daniel, an economist at ESC Europe, points out, the protests and their composition are confusing the situation without looking at the evidence around them. Spain, the UK, Germany, and Italy have all taken on labour reforms following the 2008 Financial Crisis some of which were much more painful than the proposed El-Khomri labour law (named after France’s finance minister). Daniel says that the persistent unemployment must be dealt with and other government’s have managed to do so far more effectively than France. Italy, which passed a new law called the job act in 2015, created over 200,000 jobs while France only managed to create 50,000. By reducing the very high protections workers have, it is argued that companies will be more likely to hire new employees once barriers like fines for dismissals are removed. The fact that the majority of protestors are youth and public sector employees is also worrying as these demographics aren’t so immediately affected by the reforms, as both are still heavily invested in through other social spending programs.

The problem seems to be a lack of confidence in the government rather than a real problem with the reforms. It is not what the contents of the reforms are, but whether the government is able to successfully institute them and make them work, something the Hollande government has failed to do with past reforms. What people in France have to remember when they claim authoritarianism and undemocratic behaviour is that while the use of Article 49.3 and the targeting of the labour market using unpopular reforms within France may be undemocratic in some ways, France is a member of the Eurozone monetary Union. Its economic situation has an impact on the rest of the Eurozone, and refusing to take on reforms when other members states have tightened their proverbial belts, especially when the French enjoy so much, is undemocratic in its own way. Benefiting from the privilege of being in an economic union and refusing to reform in turbulent economic times affects everyone disproportionately.

Whatever the outcome, Hollande’s reforms have caused a shift in sentiment among the youth in the population in much the same direction as the rest of Europe’s youth have turned: one that is far more dangerous and authoritarian than any reformist government could be. The protests are already starting to affect the French economy, with 820 of 1150 gas stations in France out of fuel on Sunday May, 22, as protesters blocked more than half of France’s 8 refineries. A 2010 prolonged strike at refineries in France resulted in a glut of crude oil in Europe, a spike in refined product prices due to low output from refineries, and shortages of thousands of gas stations. In a Europe going far right fast during an economic downturn, a similar situation could be exceptionally disastrous for a Union fighting multiple internal divisions.

Photo Courtesy of Looking4Poetry, Flikr (Licensed under CC-BY-NC-ND 2.0)

Marko Gombac
Marko is currently completing his BA (hons.) in Political Science with a minor in Transitional Justice. He is pursuing entrance into an MSc International Relations program, and his research interests include civil society development, extractive resource ownership and emerging security issues. His non-professional interests include sailing, skiing, and travel.