Macron Tackles French Labor Law in First Push to Fix Economy

Emmanuel Macron begins work on Tuesday on what may be one of the defining issues of his presidency: simplifying France’s labor code.

On his 10th day in office, Macron and Labor Minister Muriel Penicaud are starting a round of meetings with France’s unions and business organizations to see if there’s any common ground for distilling the country’s byzantine labor rules and letting individual companies negotiate wages rather than being subject to industrywide agreements. The draft text of any new law isn’t expected until after legislative elections in June.

The issue has frustrated French presidents for at least two decades as the country’s powerful unions opposed efforts to reduce job protection for their members. Yet Macron has signaled that shifting the French labor market onto a more flexible footing will be central to his strategy for boosting growth, keeping populism in check in the long term and winning the trust of the German government in shorter order.

France needs to “improve the access to the labor market for job seekers, notably the less qualified workers and people with a migrant background,” the European Commission said Monday in its annual economic-policy recommendations. The government should “further reduce the regulatory burden for firms,” it added.

Hollande’s Attempt

The French Labor Code runs some 3,000 pages and beyond issues such as labor negotiations and firing procedures, includes statutes on bathroom breaks and the dimensions of windows in work spaces. Penicaud, named to Macron’s first government last week, is a former head of human resources at food company Danone.

“I’m delighted to see the president fully take on this issue that has been left to fester for far too long,” Finance Minister Bruno Le Maire said at a press conference in Brussels Monday, after his first meeting with his European counterparts. “We all know that reforming the labor code is the key to allowing companies create more jobs.”

As economy minister under former President Francois Hollande, Macron helped write a labor law that would have limited severance payments and made it easier for companies to fire workers during a downturn. The law was watered down after protests from unions and Macron ended up leaving the government in August 2016 to create his own political movement, the jumping off point for his presidential campaign.

The law, now called the El Khomri law after Hollande’s labor minister, was pushed through by decree that same month. The government of former President Jacques Chirac in 2006 also backed down on a proposed law that would have made it easier to fire young workers after street protests.

Government by Decree

Philippe Martinez, head of France’s second largest union, the CGT, on Monday signaled that Macron’s ambitions are again going to face opposition.

“For the moment we’ve just had the comments the president made during the campaign, but to discuss you need a text and we have no text,” Martinez said on Europe1. “If he wants salaries to be negotiated at the company level, then we are against.”

Thibault Lanxade, vice-president of business lobby Medef, said the restrictions on firing workers made entrepreneurs reluctant to take on staff, even if that mean passing up opportunities to expand.

“Small company owners want to be able to hire but not when it’s very difficult to let people go when the economic situation changes,” Lanxade said on France Inter. “Growth is there, and we can benefit from this dynamic with a labor code that is more flexible.”

Macron has said he plans to discuss the labor bill with union and business leaders, but will then enact the resulting laws via decree to avoid parliamentary debate and amendments. Martinez said he has no opposition to using decrees, as long as it’s for measures that the unions have agreed to.

“Using decrees is not the problem in itself,” he said. “But you can’t say you want dialogue, and then say you want to go fast, and during the vacations.”

The French government spokesman Christophe Castaner said Tuesday he doesn’t expect the same level of opposition that Hollande faced when he tried to loosen labor laws.

“The Khomri Law came at the end of the term, and was never part of his mandate,” Castaner said on France2 television. “Emmanuel Macron was elected with a plan to free up labor in this country.”