Thursday, August 31, 2017

Has Macron Sliced the Gordian Knot?

Emmanuel Macron badly needs a win. I think he may have it. His labor code reform is out, and there has been no earthquake. It seems unlikely there will be. I'm working on a longish magazine article, but here is my initial reaction:

Today, the details of the reform proposal were finally released. A key provision was a reduction of the maximum indemnity available to employees deemed by a review panel to have been fired without cause. In return, labor received a sweetener: an increase of 25 percent in the compensation due to employees judged to have been laid off for legitimate economic reasons. But, to the unions’ displeasure, employers can now claim to be in economic difficulty if a plant in France is unprofitable, notwithstanding profitable operations outside France. The unions are also unhappy with a provision allowing small firms more room to negotiate with workers directly, without the presence of a union representative.
 On the other hand, the government offered a number of new benefits designed to win union support, including a training allowance for union members who wish to expand their skills and a new office to ensure that companies do not violate rules governing collective bargaining.
 The olive branch extended to the unions may prove effective. Force Ouvrière, the third largest union in France, has announced that it will not participate in the general strike called by the second largest union, the CGT, for September 12. Since FO had been one of the most vociferous opponents of a previous labor code reform, this is a sign that Macron may have sliced the Gordian knot of labor code reform. The country’s largest union, the CFDT, has long been more receptive to liberalization of the labor laws than its two rivals and had already refused to join the CGT. But CFDT leader Laurent Berger said[ that he was disappointed by the provision narrowing the definition of economic difficulty to operations within French borders. He nevertheless characterized other provisions of the reform as “productive” and “intelligent.” He also indicated that the government had withdrawn certain proposals in response to union objections and said that the final result was not “the destruction of the labor code that some critics have proclaimed.”
 As is often the case in French politics, the symbolism of the reform has come to overshadow the substance. The measure is widely seen as a test of Macron’s strength and resolve. Proponents make the exaggerated claim that persistent high unemployment in France is due primarily to labor-market rigidity, which the reform will fix once and for all. Opponents, led by the fiery orator Jean-Luc Mélenchon of France Insoumise and the mustachioed union boss Philippe Martinez, hope to gin up the fervor of their troops by presenting the measure as an all-out assault on the anti-neoliberal resistance (although Martinez did not refrain from participating in negotiations to obtain a better deal for his members, he did not back down from his call for a general strike after the results were announced). While the clash will be dramatized for maximum political effect on both sides, the outcome looks more like an incremental shift toward lighter labor-market regulation rather than a wholesale jettisoning of France’s byzantine labor code.


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