The outsize power of French labor unions

Labor activism undermines huge and tiny enterprises “They know the power they have left is to be disruptive”

Fewer than 8 percent of French employees belong to a union, compared with 25 percent in the U.K., 18 percent in Germany, and less than 11 percent in the U.S., data from the Organisation for Economic Co-operation and Development show. Yet French law requires any company with more than 49 employees to have union representatives, even if no employee is a member of a union.

Desseilles Laces, a 126-yearold manufacturer in northern France whose customers include Victoria’s Secret and Gucci, has become the most recent example of the power of the unions to unsettle even small enterprises. Co-owner Michel Berrier says the company may have to shut down after a court ruled in a suit brought by the unions it had to reinstate five workers laid off after sales slumped in 2013. Only two of the company’s 74 employees are union members, Berrier says. Union representatives did not return calls for comment. The lacemaker, which had 2015 sales of €7 million ($7.7 million), says reinstating the workers will cost it about €1 million. Liquidation would lead to the loss of all jobs at Desseilles. The company

and the government are appealing the ruling. Desseilles’s plight was recently the subject of a story on national TV. “It’s baroque—we may lose everything for a rule that protects unions who protect no one but themselves,” Berrier says. “At the end of the day, we spend more time struggling with French labor laws than focusing on our business.” Chinese investors expressed interest in the company.

Unions were part of Socialist President François Hollande’s political power base, but now they’ve become opponents. After his latest attempt at labor reform in Parliament prompted a union threat to demonstrate, Hollande has put that effort on hold. The postponed bill would have voided a law that limits the workweek to 35 hours. It would have allowed businesses to increase working hours with minimal extra compensation and without union support. The bill also would have made it easier for companies to cut jobs while limiting severance. The Confédération Francaise du Travail (CFDT), the umbrella union group, called the delay a victory. “We’ve obtained the postponement of the labor law, now we’ll fight to obtain a rebalancing of the text,” CFDT Secretary General Laurent Berger says.

French unions started to weaken in the 1970s, when manufacturing declined in the West, globalization moved production offshore, and managers circumvented organized labor with temporary contract workers who didn’t have the same privileges or job protections. The unions want to refill their ranks, but recruitment is hard when more French

people identify organized labor as just another special interest group. Radu Vranceanu, an economics professor at ESSEC Business School in Paris, says of the unions: “They know the power they have left is to be disruptive.”

Tiny Desseilles’s troubles are magnified in Galeries Lafayette and Printemps, department stores that draw millions of shoppers from around the world. Unions are refusing to obey a law pushed through by Hollande that allows stores to remain open 12 Sundays per year. The unions want extra compensation for employees—even though Galeries Lafayette is offering doublepay for Sunday hours and Printemps said employees are “ready to work on a Sunday.” Galeries Lafayette said in September that it was in talks with unions to open three Paris stores on Sunday, a move expected to add 1,000 jobs at its flagship, boosting sales as much as 7 percent.

The unions’ moves have had little positive effect on France’s unemployment rate, which, at above 10 percent, is twice that of the U.K. and Germany. Hollande’s reforms—which include cutting the labor tax for companies that are hiring, and deregulating businesses that once held monopolies granted by the state—would have lowered the cost of hiring and made businesses more competitive.

“The problem we have today is to find people to sit around the table,” Stéphane Le Foll, a minister and government spokesman, said of the impasse after Hollande’s weekly cabinet meeting on March 2. “We want to empower those who want to make compromises to move ahead.” In response, the railway workers union struck, disrupting travel on March 9. A second day of action is planned for March 31. �Hélène Fouquet

The bottom line France’s trade unions have weakened, but they have enough power to stall labor reform.