Labor reform to make or break Macron presidency, say bosses

PARIS - 29 August 2017: France’s employers federation urged President Emmanuel Macron on Tuesday to “go all out” in a reform of the labor market to be presented this week in the face of a precipitous fall in his popularity and increasingly restless unions.

His government will announce decrees on Thursday aimed at making it easier for bosses to hire and fire while chipping away at long-cherished labor rights.

The reform is Macron’s first major policy move since a landslide election victory in May against far right leader Marine Le Pen and it is expected to set the tone for other initiatives.

Post-election goodwill toward the president has quickly rubbed off since the government went to work on his pro-business reform agenda, raising doubts about how far and how quickly it can be carried out.

“The labor law will be the bellwether for Emmanuel Macron’s term and his will to reform,” the head of the MEDEF employers federation, Pierre Gattaz, told business leaders at the start of its annual end-of-summer seminar.

“We’ve absolutely got to go all out to simplify the labor code,” Gattaz said, adding that “everything will be in the decrees details”.

France’s unemployment rate has fallen to a five-year low of 9.5 percent in recent months, but Macron hopes to take it much lower by easing labor regulations that firms say deter them from hiring.

Details will be published with the decrees, but outlines so far indicate the reform would in particular shift collective bargaining to the company level and simplify staff representation.

Unions are particularly anxious about details on plans to cap severance pay that labor courts can order companies to pay in unfair dismissal cases.

"STATE LIE"
The government consulted with unions as it drafted its proposals over the summer and so far only the hardline CGT has responded by calling a strike for Sept. 12.

CGT head Philippe Martinez accused the government of maintaining suspense as long as possible over the reform’s details to keep unions from forming a united front against it.

“They want us to believe that this is a new project and that it’s the only way to reduce unemployment but that’s a state lie,” Martinez told Communist newspaper L’Humanite.
The coming weeks will reveal whether other big unions are ready to join the CGT in protest and build meaningful opposition to Macron’s reform agenda.

“We expect him to succeed and lay the basis for a major French economic and political renaissance,” economist Holger Schmieding, of German investment bank Berenberg, wrote in a note to clients.

“As a result, we look for France to outclass a Germany that remains strong but is becoming a little complacent and a UK that has shot itself in the foot through Brexit in coming years.”

Several communications missteps over the summer have added to mounting ill-will toward Macron. In particular, Prime Minister Edouard Philippe has described a cut in widely enjoyed housing allowances by five euros ($6) per month as "not smart".

Macron's popularity ratings have wilted, leaving only 40 percent with a positive view of his performance in a poll published on Sunday, down 24 percentage points in two months.

He plans an overhaul of unemployment insurance and professional training starting in coming months, followed by the retirement system next year.

($1 = 0.8317 euros)