Macron learns from past as he pushes for jobs re­form

With the unions di­vided and his man­date still fresh the pres­i­dent is in a good place, writes Tim Wal­lace

The Sunday Telegraph - Money & Business - - Making A Success Of Brexit -

Protests de­feated François Hol­lande when he tried to shake up France’s jobs mar­ket. Jac­ques Chirac backed down when his pub­lic sec­tor re­forms met fierce re­sis­tance on the streets.

Ni­co­las Sarkozy faced down pro­longed strikes in his bat­tle to raise the re­tire­ment age, only for his suc­ces­sor to chop it back down to 60. Now it is Em­manuel Macron’s turn. The en­er­getic young pres­i­dent un­veiled a wave of re­forms on Thurs­day to the coun­try’s trou­bled jobs mar­ket, in the hope of cut­ting its seem­ingly per­ma­nently high un­em­ploy­ment rate.

The cost of fir­ing work­ers will be capped. Unions will no longer set pay for en­tire in­dus­tries – em­ploy­ers will ne­go­ti­ate on a com­pany level in­stead. Work­ers’ com­mit­tees, which are manda­tory in big firms, will be cut down. But it is not all one-way traf­fic. Min­i­mum pay­outs to re­dun­dant work­ers are go­ing up, too.

In to­tal, 36 mea­sures have been pro­posed. One key aim is to make it eas­ier to sack work­ers, and so to en­cour­age com­pa­nies to take staff on in the first place. Another is to end the painful di­vide be­tween those in long-term jobs who are al­most un­sack­able ver­sus those in tem­po­rary roles with reg­u­lar spells of job­less­ness.

“No­body can claim that the labour code to­day helps cre­ate jobs,” said Edouard Philippe, Macron’s prime min­is­ter.

The ques­tion of suc­cess has two key com­po­nents. Will Macron be able to pass the mea­sures in a coun­try renowned for its re­jec­tion of se­ri­ous re­forms in the past? And are the changes bold enough to have a mean­ing­ful long-term im­pact?

Aware of this his­tory, Pres­i­dent Macron con­sulted vig­or­ously on th­ese re­forms. That move ap­pears to have been re­warded in the re­sponse to his pro­pos­als – CGT, the hard-line union, has called for strikes on Septem­ber 12, but oth­ers, in­clud­ing the more main­stream CFDT, have not.

Force Ou­vriere, another of the coun­try’s most pow­er­ful unions, has also in­di­cated be­hind closed doors that it will not op­pose the re­forms. Con­ces­sions in­clude the re­quire­ment that firm-level de­ci­sions on pay and work­ing con­di­tions re­quire the sup­port of unions rep­re­sent­ing a ma­jor­ity of work­ers.

As a re­sult, the pres­i­dent looks likely to es­cape uni­fied ac­tion from across the trade union move­ment.

Par­lia­men­tary op­po­si­tion is also un­likely to be a ma­jor prob­lem. Macron’s elec­toral vic­tory was quickly fol­lowed with sub­stan­tial suc­cesses in par­lia­ment, and deputies have agreed to let the re­forms pass by pres­i­den­tial de­cree rather than fac­ing scru­tiny, line by line, in the na­tional assem­bly.

He also in­tro­duced the re­forms early in his pres­i­dency when he has pop­u­lar sup­port on his side – and can al­low time for the im­pact to kick in be­fore he is next up for elec­tion. “In­evitably in France, when­ever you at­tempt labour mar­ket re­form you will get some street push­back, and that will be the case here again,” says Cathal Kennedy, Euro­pean econ­o­mist at RBC Cap­i­tal Mar­kets.

“But what is im­por­tant is that Macron has not made the same er­rors as the Hol­lande ad­min­is­tra­tion made – he is tack­ling this is­sue early, so still has the pop­u­lar man­date there fresh.

He is not push­ing it through, he has ne­go­ti­ated with the unions. And if you be­lieve opin­ion polling, there is a mood among the pop­u­lous for labour mar­ket re­form and job cre­ation.”

In terms of the eco­nomic im­pact, the im­por­tance of a flex­i­ble labour mar­ket is dif­fi­cult to over­state. France can look to its ma­jor neigh­bours for ev­i­dence of that. To the east, Ger­many

‘Macron has not made the same er­rors as the Hol­lande ad­min­is­tra­tion made – he is tack­ling this is­sue early’

Fresh man­date: Em­manuel Macron is in­tro­duc­ing the jobs mar­ket re­forms early in his pres­i­dency, when he still has pop­u­lar sup­port and can al­low time for the changes to have an ef­fect be­fore the next elec­tion

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