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Commentary: Labor reform in France’s Macron economy
September 18, 2017 / 6:16 AM / a month ago

Commentary: Labor reform in France’s Macron economy

Protestors against President Emmanuel Macron’s proposed liberalization of French labor laws were on the streets of the country’s cities on Tuesday. The marchers, chanting slogans and brandishing placards, halted traffic as they moved slowly through the streets. A fringe of anarchists broke windows; police responded by firing tear gas. But this was no rerun of the mass marches of past years, let alone the semi-revolutionary eruptions of 1968.

Demonstrators hold a banner reading "Oust Macron" during a national strike and protest against the government's labor reforms in Nantes, France, September 12, 2017. REUTERS/Stephane Mahe

France’s second-largest union, the Conféderation Générale de Travail (CGT) was the only one of the three main workers’ organizations that took part. Another protest, this one organized by the far-left France Insoumise (France Unbowed) party is scheduled for Sept. 23. This week’s marching columns numbered, nationwide, in the few hundred thousand rather than the many millions hoped for – the police claimed 223,000, the organizers 400,000. There was little effect on production, services or transportation.

It was neither victory nor defeat for either side. Instead, Macron’s changes to the vast labor code – hiring and firing will be easier, some workplace issues will be negotiated at company level – hang in the balance. The CGT, the left and the far-right National Front all oppose them, but Macron and his government have a solid, if inexperienced, majority in the Assembly.

More than his predecessors who tried and failed to liberalize France’s labor market – the center-right Nicolas Sarkozy and the center-left Francois Hollande – Macron has pinned the credibility of his presidency on systemic, cultural change, a deliberate jolting of French society and economy out of the rut into which he believes it has fallen. He is contemptuous of both former presidents (he knew Hollande well, having been both his advisor and Finance Minister), believing them to have given up too soon and too easily. When Macron spoke, as he did earlier this month, of “slackers,” he said when challenged that he meant those who retreated from the necessary surgery on France’s body politic. The marchers, however, seized on the word and put it on their placards: “Macron, the slackers will kick you out,” read one.

The slackers have a point. Indeed, they have several. Labor productivity in France is relatively good, only a little behind that of the United States and the highest of Europe’s major economies. When French workers work, they work well.

Though both Macron’s labor and economic reforms have won support from the center-right and from many economists, France remains doubtful, even hostile. Perhaps the best-known Frenchman in political and intellectual circles before Macron was the economist Thomas Piketty, whose “Capital in the 21st Century” (2013) is a best seller and who has excoriated his country both for its steeply rising inequality and its hypocrisy in pretending it is egalitarian. Hypocritical it may be, but it clings to the myth, and perfectly bourgeois Frenchmen and -women may recoil from an obvious widening of the income and wealth gaps.

President Emmanuel Macron at a news conference with Bulgarian Prime Minister Boyko Borissov near Varna, Bulgaria, in August. Macron's labor reforms will make it easier for French employers to hire and fire workers. REUTERS/Stoyan Nenov

To put major emphasis on labor reforms may, in any case, not be the main point. Germany liberalized its labor market through the so-called Hartz reforms between 2003 and 2005, but unlike France the German unions were relatively moderate, wage bargaining was already localized and investment was rising. In addition, the costs of German unification had already been paid.

If France’s CGT and the left and far right cannot mobilize enough opposition, the labor reforms will be implemented, and they could be part of a general renaissance of the French economy. That is also dependent on other ifs – if the present improvement in the European Union economy continues (the European Commission, while underscoring that all members are growing, warns of “higher-than-usual uncertainty) and if investment increases, then France could become more like Germany. The German (and EU) leader Chancellor Angela Merkel wants to see that, and Macron wishes to show her he can deliver.

Yet delivery of this kind of economy now comes with an apparently unavoidable cost. Faster growth and even a fall in unemployment can produce an ever-larger underclass, composed both of those with few qualifications and the still-increasing numbers of immigrants, often from poor countries. Macron’s opponents like to quote the Cambridge University economist Christopher Bickerton, who argued in a New York Times column that labor market reforms could generate “new kinds of inequality.” Bickerton cited Britain’s deregulated labor market as an example, with record employment levels existing alongside low productivity, stagnating wages and a proliferation of short-term contracts. “Not since the economic boom of the 1950s and ’60s has capitalism in Europe been dynamic enough to combine high levels of employment with long-term material gains for the masses,” he wrote. It will not do so, he believes, under Macron.

The deeper movement, about which Macron can do little, is that the greater integration into the global economy that he champions produces huge gains for the top one percent, more modest rises for the well educated and skilled, but a much larger tail of the precarious, insecure and low paid. The leftist German think tank, the Rosa Luxemburg Institute, called this trend “the end of social capitalism.” A sign of this is the general decline of social democratic parties such as the once-mighty German Social Democrats and the shrunken French Socialists. Only in the UK has the main left party, Labour, made substantial political gains with a far-left leadership.

Social democracy depended on, and greatly furthered, “social capitalism.” It did so in France, under socialist governments, did so again in Germany and still does, though with difficulty, in the Scandinavian states. Organized labor had a place, even an honored and at times powerful one. Now, its gains are a hindrance, its ideology no longer attractive. The leaders of the further left – such as Labour’s Jeremy Corbyn in the UK and Jean-Luc Melenchon, leader of France Insoumise in France - gain by being fundamentalists, opposed to capitalism itself, social or not.

In moving France towards the globalist model, Macron echoes the claim made nearly four decades ago by British Prime Minister Margaret Thatcher, that there is no alternative. In this, he may be more right than she: there is presently no popular base, no public assent, no powerful parties able to show that cooperation with capitalism is best for the workers. And that, sooner or later, will be a large problem – for leftists, or course, for the state which must provide some support for the poor and ultimately, for the capitalist system itself.

About the Author

John Lloyd co-founded the Reuters Institute for the Study of Journalism at the University of Oxford, where he is senior research fellow. Lloyd has written several books, including “What the Media Are Doing to Our Politics” and ”Journalism in an Age of Terror,” published this month by I. B. Tauris. He is also a contributing editor at the Financial Times and the founder of FT Magazine.

The views expressed in this article are not those of Reuters News.

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