A Guy’s View: The end of socialism?
Socialism has had a long history in France. Frenchmen have been willing to bring about revolutions in order to secure their reasonable treatment, even in a sea of capitalism. But they may have to fight their battles all over again.
The new President of France announced last week that he was ready to proceed with major labour reform in that country. This, he said, was one important step in breaking the back of the stubborn unemployment situation in France.
To his credit, this move came after three months of discussion with labour unions. These discussions were intended to try to explain the need for his initiatives and how they might impact workers, and to have labour concerns taken into account when his programme was rolled out.
Like in any other situation, there was understanding and agreement as well as disagreement. The need for reform notwithstanding, the country is still a democracy.
The key elements of the new reforms follow. Here, I have borrowed from a report by Michel Rose, edited by Leigh Thomas and Ralph Boulton; copyright by Thomson Reuters:
RULES IN SMALL COMPANIES
• Employers of less than 20 people will be able to negotiate directly with employees on workplace rules even in the absence of in-house unions.
• For companies of less than 50 employees without unions, a representative elected by employees will be able to strike deals with the employer.
MUTUALLY AGREED WORK CONTRACT TERMINATION
• In 2008, the possibility for an employer and its employee to terminate a work contract by mutual agreement was introduced to avoid lengthy dismissal procedures for employers and resignation without jobless benefits for employees. The new reform would allow several employees to negotiate such voluntary agreements together.
DISMISSAL RED-TAPE
• An employer will no longer be punished by labor courts if technical errors were made in dismissal forms but the dismissal is considered justified.
• A new simplified dismissal form will be introduced.
SCOPE OF ASSESSMENT OF ECONOMIC GROUNDS FOR DISMISSALS
• Labour courts currently assess the health of companies at the global level to decide whether they had economic grounds to dismiss workers. The scope will now be reduced to the national level only, as is the case in most other European countries, giving more leeway for multinational companies to adjust staff levels in France.
WORKPLACE RULES
• The goal is to introduce a lengthy list of issues which can be set at the company level.
• The El Khomri law introduced the possibility of opting out of sector-wide agreements to set overtime pay rates and the new reform would extend the list of opt-outs to other areas.
DISMISSAL AWARDS:
• The goal is to cap unfair dismissal compensation awards and cut the time taken to reach verdicts in labor tribunals. The argument is that employers need more visibility on time and cost of disputed dismissals and will be less reticent to recruit if they have that.
• Employees will now have one year to challenge a dismissal in courts instead of up to two years currently.
• Attempts to include this in past years were dropped because the constitutional court first struck down the measure on technical grounds and the previous Socialist government later decided to push other elements of the reform through instead.
SHRINK NUMBER OF CONSULTATIVE BODIES:
• The goal is to reduce the number of in-house forums via which employees are consulted on issues ranging from work hours and conditions to health and safety.
• The government said it would merge three of the current four bodies for all companies of more than 50 employees.
INCREASE OF SEVERANCE PAY
• In a concession to unions, severance pay employers have to give employees will be increased by 25 percent.
Bullet pointing these issues removes any mask of confusing narrative. When these elements are looked at baldly, it is easy to understand what the French Government perceives to be the contribution of labour unions to the economic problems of the country.
If this list of corrective reforms is anything by which one may be guided, it seems that French unions are obstructionist and retard business development, both at the micro and macro levels. It seems that even in small businesses, unions are structured to prevent business innovation and allow employers to work out mutually beneficial arrangements with workers.
The new rules would allow employers of businesses that employ less than 20 workers to negotiate directly with employees on workplace rules. In a developed country like France, a business employing less than 20 persons is tiny. But, apparently as it stands now, even at this level, unions seek to highjack administrative arrangements and prevent direct employer to employee negotiations.
In a business employing less than 50 persons, where there is no union, the workers would be free to select a representative from among them and strike deals with their employer. Currently, it seems that only a union can approve such deals.
Also of interest is dismissal red-tape. There, as in Barbados, a procedural slip could mean that the employer is found to be at fault in an unlawful dismissal action. Form and substance are of equal weight. The new rules would be less legal and more common sense. The substance of the matter would be given more weight. As a practitioner of the law, one is expected to use all the facilities that the law allows in representing one’s client, but it is far from right for a guilty, corrupt employee to be ruled as not guilty because in her dismissal, the employer did not tick a certain box.
It should be noted that in taking these steps, France is trying to catch up with it European counterparts. The view has been expressed that France’s labour rules are a major contributor to that country lagging behind other developed countries in unemployment and attractiveness as a business domicile.
Of course, not all of the unions are on board. Some have threatened to march, and they will. But will it change anything? Can France afford not to change its labour laws in the face of changing market structures and economy? Has socialism run its course?