French government unveils plan to liberalise jobs market

The French government has unveiled contentious pro-business measures to liberalise the country’s dysfunctional jobs market, in a move that will test President Emmanuel Macron’s resolve for reform of the euro zone’s second-largest economy amid sinking approval ratings.

The proposals presented by prime minister Edouard Philippe on Thursday include a cap on the damages that courts can make employers pay in case of wrongful dismissals, and a reduction in the statute of limitations from two years to one year for workers. Multinationals will be able to shut down French lossmaking plants more easily.

Businesses with fewer than 50 workers – encompassing 95 per cent of French companies – will be able to bypass unions to negotiate working conditions. Larger companies will be able to strike more specific deals with unions, instead of having to abide by more rigid sector-wide rules, and will be able to organise employee referendums to overcome any failures to reach agreements.

Mr Philippe said the measures were “aimed at regaining the lost years”.

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“Our goal is to boost job creation by giving more security and visibility to employers and more guarantees for workers,” he said.

The measures are central to Mr Macron's plan to make France more attractive to foreign investors and tackle an unemployment rate of more than 9 per cent. The reform is also designed to show France's renewed determination to fix its economy – a condition for Brussels and Berlin to agree to support more stimulus and more protective labour rules at an EU level.

‘Bridled by rules’

In an interview published on Thursday, Mr Macron said the measures were intended to “unleash the energy” of France and end the “sham” of a country that is “tough with the weak but boasts about equality”. France was “bridled by rules and privileges” and “unfair and inefficient”, Mr Macron told Le Point magazine.

The reforms will be adopted by parliament next month. It comes as popular support for Mr Macron has been plunging. More than half of the French now say they are unhappy with the 39-year-old centrist president, who defeated far-right leader Marine Le Pen in a presidential run-off in May.

Mr Macron told Le Point he would “have to live for months with the people’s impatience” until the reforms took effect.

After a summer of consultations, two of France’s three largest unions – the Confederation Francaise Democratique du Travail and Force Ouvriere – have given their tacit backing to the labour reform Bill, aware that the government has the upper hand given its large majority in parliament.

The CFDT and FO say the reforms damage the power of unions but accept that more labour agreements need to be negotiated within companies. They have secured a rise in the severance packages that employers have to pay. Most employers will still need the consent of unions representing half of workers to agree deals on working conditions.

The hardline CGT has opposed the reforms, calling for a day of strike on September 12th. The union spearheaded street protests last year against a less ambitious jobs reform carried out by François Hollande, Mr Macron’s deeply unpopular predecessor.

Copyright The Financial Times Limited 2017