French labour code reform: towards more precarious employment?

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On 4 November 2015, France’s labour minister, Myriam El Khomri, launched a reform of the labour law. The two main objectives are to revise the entire labour code and to give company-level agreements a central role, against a background marked by unemployment reaching 10.6 per cent of the active population in November 2015.

In absolute terms, that represents 5.5 million people overall, relative to 4.62 million in May 2012, when François Hollande took office.

For the French president, who announced that he would have no reason to stand for office again in 2017 if unemployment had not fallen by then, there is no time to waste.

It is his instructions the labour minister is following when she explains in her roadmap for the labour code reform that the current system no longer responds to the twofold objective of protecting employees and creating a stable environment for companies.

The reform takes inspiration from the book Work and the Law by Robert Badinter (former justice minister under François Mitterrand) and Antoine Lyon-Caen, and the report submitted by the former director general of labour Jean-Denis Combrexelle to Manuel Valls in September.

Trade unions and employers agree that the labour code is overly complex, although not for the same reasons.

For employers, employment is too strictly regulated: “Applying the same rule to all companies, regardless of their size or sector, does not match the new, increasingly competitive and globalised economic reality. In our view, regulation through law is out-dated. We would prefer regulation through collective bargaining,” says the head of the French employers’ organisation MEDEF.

Anne Fretel, an economist at Lille-1 University and a member of the ’Appalled Economists’ group explains that this glut of legislation has been created by successive deregulation introduced over the last twenty years or so. “Since the 1980s, the legislature has not tired of establishing derogations to ‘relax’ the labour code, which represents additional pages each time. Now, the same argument has been turned against the code itself. Yet no one would suggest getting rid of the commercial code, which is just as bulky.”

Fabrice Angei, a member of the confederal bureau of the Confederation Générale du Travail (CGT), adds: “We do want to change the labour code, but to cover, for example, self-employed workers who are not really self employed, the right of digital workers to disconnect, or occupational social security.”

 
New architecture laden with meaning

On the recommendation of the Combrexelle Report, El Khomri is proposing a labour code with a new architecture resting on three tiers and centred on collective bargaining at branch or company level.

The first tier would guarantee fundamental principles such as the minimum wage and working hours (the famous 35 hours) – peremptory norms from which employers would not be able to depart.

In November, a committee headed by Badinter was mandated to draw up these fundamental principles. They will serve as the basis for the bill that will be presented in January 2016.

The second tier would be comprised of the areas open to negotiation, at branch or company level.

And the third tier would cover the provisions applicable where there is no branch or company-level agreement between employers and unions, in other words, the supplementary provisions.

What balance should there be between the peremptory norms that apply across the board to all workers and the supplementary provisions that would only apply in the absence of branch or company-level agreements?

This is where the disagreement lies between the unions, on one side, and employers and the government, on the other.

“Since the 1980s, the idea has been imposed that company-level bargaining is the most pertinent, the ‘closest to the ground’, and therefore the best suited to companies,” explains Fretel.

“The hierarchy of standards (the labour code is the minimum floor, and branch and then company-level agreements can only be more favourable than the latter) has gradually been called into question, with the law providing for ever more derogations. In 2004, authorisation was given for company-level agreements to be less favourable than branch agreements. The risk is that the law applied becomes contingent on the local balance of power,” continues the labour economist.

“This reform is an expression of the will for labour rights to be governed by company-level agreements rather than by the law. Yet, if we add the difficult economic and social situation to the relationship of subordination between workers and their employers, the negotiating framework is unfair. At present, employers are leading the dance in negotiations, which are often kept to the lowest level as a result of employment blackmail. This new architecture seeks to make workers a little more vulnerable,” protests Angei.

 

Incensed

The MEDEF, for its part, is incensed that the minister is not going further with her reform.

“The Combrexelle Report advocates tackling, as of next year, working conditions, employment, wages and working hours. The government wants to concentrate on the latter issue alone. For us, it’s a great deal of effort for such a trifling result, because the room for manoeuvre created by this reform will not be decisive. We wanted, for instance, to negotiate a relaxation of the rules on fixed-term contracts,” explains the head of MEDEF.

The government, meanwhile, says the reform should allow companies to “regain confidence in their ability to adapt with a view to investing and creating employment” because the complexity of the current labour law “discourages the hiring of employees in very small enterprises (VSE)”. It will therefore focus on “giving security to employers, particularly the VPEs and SMEs (small and medium size enterprises)”.

Fretel refutes these claims, arguing that reorganising collective agreements could, in fact, work against these companies. “The establishment of the branches was driven by employers, to avoid unfair competition between companies and to prevent, in times of full employment, the largest businesses from being the only ones attracting workers, thanks to their advantages. Giving company-level negotiations priority over branch negotiations amounts to placing small companies in difficulty.”

 

This article has been translated from French.