A Move Towards a New Economy: The Impact of France’s New Labor Laws

Jessica Nowak – For the past 30 years, France’s employee-friendly labor laws have remained the untouched.[1] Upon taking office four months ago, France’s new president, Emmanuel Macron, pledged to change the archaic and extensive labor laws that he believed were hindering the French economy.[2] He, along with several other right-wing French politicians, believes that the newly revised labor laws are necessary to the survival of both France and the European Union.[3] Accordingly, the Prime Minister of France, Edouard Phillipe, asserts that the reforms are a necessary tool to reduce unemployment.[4] Currently, France’s unemployment rate is a staggering 9.6%.[5] It is estimated that the institution of this code will create at least one million new jobs for the French people.[6] Macron’s new laws also support the French small businesses that were objecting to the excessive red tape and regulations imposed on them by the old Code Du Travail.[7]

Macron’s new version of the labor laws will make it easier for business to hire and fire employees, which means less bargaining power for the French labor unions.[8] The new legislation, which was passed by decree on September 22 of this year, allows for more workplace issues to be negotiated directly with employees rather than waiting for union mediation.[9] The new code, unlike the old code, will also allow for the expansion of many French small businesses. Many small businesses previously capped their number of employees at 49 people as to avoid the nearly three dozen labor laws that went into effect once 50 or more workers were employed.[10] In accordance with the old Code Du Travail, French courts also imposed mandatory severance pay, which will be limited with Macron’s new laws.[11]

Although there are many supporters on his side, Macron faces intense opposition from the left wing.[12] The opposition believes that the new regulation “turns the market upside down”[13] and the unions are scared of losing power.[14]They believe that with this new code will come fewer rights and remedies for workers because it limits the Unions’ ability to delay the businesses decisions.[15] Since the announcement of the new laws there have been several protests throughout France. Last Thursday, September 21, 16,000 people turned out in Paris to protest the laws before Macron signed them into action the following day.[16] The week before that, the CGT union protested the reforms with over 220,000 people in tow.[17] Jean-Luc Melenchon, a leader of the far-left wing, rallied the disgruntled voters on Saturday September 23 to march through eastern Paris in protest of Macron and his new labor laws.[18] Unlike his predecessor who backed down from changing the code when people began to protest, Macron continues on with his plan of reform.[19]

Even though these reforms have been put into place to help the French economy, no one is exactly sure what the short-term effects will be. The president of the Council on Economic Analysis, Agnès Bénassy-Quéré, stated that “the short-term impact is not completely clear,” but that the new regulations “will encourage hiring but also could free employers to fire…the goal is to make the market more fluid.”[20] With the employment of the new labor laws beginning within the next few weeks, the world will have wait and see how the French economy fares under the new legislation.

[1] Alissa J. Rubin, France Unveils Contentious Labor Overhaul in Big Test for Macron, N.Y. Times (Aug. 31, 2017) https://www.nytimes.com/2017/08/31/world/europe/macron-france-labor-law.html?mcubz=3.

[2] Id.

[3] Id.

[4] Cole Stangler, The False Promises of Macron’s Labor Reforms, The Nation (Sept 22, 2017), https://www.thenation.com/article/the-false-promise-of-macrons-labor-reforms/.

[5] Gregory Viscusi, Macron’s Uphill Battle Against France’s Labor Law, Bloomberg BusinessWeek (July 24, 2017, 12:00 AM), https://www.bloomberg.com/news/articles/2017-07-24/macron-s-uphill-battle-against-france-s-labor-law-quicktake-q-a.

[6] Id.

[7] Rubin, supra note 1.

[8] Id.

[9] Id.

[10] Liz Alderman, The Number That Many French Businessmen Fear, N.Y. Times (July 23, 2014), https://www.nytimes.com/2014/07/24/business/international/the-number-that-many-french-businesses-fear.html?mcubz=3.

[11] Viscusi, supra note 5.

[12] Luke Baker, French Union and Left-Wing Plan 10 Days of Action to Rattle Macron, Reuters (Sept. 18, 2017, 8:08 AM), https://www.reuters.com/article/us-france-reform-unrest/french-unions-and-left-wing-plan-10-days-of-action-to-rattle-macron-idUSKCN1BT1BQ.

[13] Rubin, supra note 1.

[14]Adam Nossiter, Macron Takes on France’s Labor Code, 100 Years in the Making, N.Y. Times (Aug. 4, 2017), https://www.nytimes.com/2017/08/04/world/europe/emmanuel-macron-france-economy-labor-law.html?mcubz=3.

[15] Id.

[16] Kim Willsher, Thousands Join Mélenchon Protest in Paris Against Macron’s Labour Reforms, The Guardian (Sept. 23, 2017, 7:04 PM), https://www.theguardian.com/world/2017/sep/23/thousands-join-jean-luc-melenchon-protest-paris-emmanuel-macron-labour-reforms.

[17] Baker, supra note 12.

[18] The Associated Press, French Far-Left Leader Rallies Macron Critics to The Streets, N.Y. Times (Sept. 23, 2017, 3:49 PM) https://www.nytimes.com/aponline/2017/09/23/world/europe/ap-eu-france-protest.html?_r=0

[19] Nossiter, supra note 14.

[20] Rubin, supra note 1.

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