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REFORM

French government wobbles on key labour reforms bill

French Prime Minister Manuel Valls on Monday retreated on controversial labour reform plans opposed by the left flank of his Socialist Party, setting a new round of consultations on the proposals.

French government wobbles on key labour reforms bill
File photo: AFP

Leaked in mid-February and greeted with howls of protest from trade unions, the proposals would essentially make it easier for companies to lay off workers.

“Probably over the next week I will meet with all social partners, labour unions and employers' organizations, one by one,” Valls told reporters.

Valls said that after the consultations, he hoped to bring the parties together with the labour and economy ministers, Myriam El Khomri and Emmanuel Macron, to renew discussion on the reform plans.

The submission of the proposals to the cabinet has been postponed from March 9th to March 24th, a government source told AFP.

MP Christian Paul, leader of Socialist dissidents in parliament, said on Monday: “What we need today is to withdraw (the proposals) for a deep re-write, and not a postponement.”

Labour unions had a mixed reaction to the delay, with the CFDT's Laurent Berger welcoming the chance to “rebalance the text”.

Jean-Claude Mailly of the more left wing union Force Ouvriere however was sceptical, saying “postponing is not suspending… This changes nothing.”

The reforms are part of government efforts to combat record unemployment levels in a country where employers are loath to take on permanent workers, as letting them go can be near impossible.

However critics have complained the measures would dismantle one of the key job guarantees for French workers.

Currently French companies have to justify in court plans to shed workers due to an economic downturn, a process they have complained makes it difficult and expensive to trim staff when the economy slows and ultimately makes them reluctant to hire.

The reform spells out simple conditions such as falling orders or sales, or operating losses as sufficient cause for shedding employees.

It also provides more room for companies to reach agreements with their staff on employment conditions, and provide more exceptions to the conditions set out in the labour code, including on overtime pay and maximum working hours.



Socialist 'implosion'

El Khomri said the proposals aimed to boost competitiveness and protect jobs.

With many left-wing Socialists unhappy with the adoption of pro-business policies, El Khomri threatened that the government could use a controversial mechanism allowed under the French constitution to adopt the law without parliamentary approval.

Paul said Monday he could “not rule out” calling for a no-confidence vote if the government takes that route.

“We have to clear up a certain number of misunderstandings,” Valls said.

“We have to explain, respond to a whole series of false reports about this text.”

Just last Tuesday Valls told French radio he did not doubt “for a single moment” that the cabinet would approve  the measures on March 9th.

A member of the right-wing Republican Party said with the disarray over the labour proposals, France was “witnessing live the implosion of the Socialist government”.

The far left, for its part, reiterated calls for the reforms to be scrapped.

French historian Stephan Sirot, who specializes in labour relations said the latest row was just part of an age-old debate in France.

“This debate – that some workers in France are too protected and mean others are out of work – has been around for 30 to 40 years in France,” he told The Local.

“It's not new, it comes back, again and again.

“It basically shows that the French society values workers having strong protection, even if most of the public agree that reforms need to be made.”

Sirot says part of the left's rebellion against the reform is down to the fact that they see it as the latest in a succession of policies that favour businesses over workers.

“While there have been reforms to favour companies, unions say there has been very little to favour workers and boost protection;” said Sirot.

 

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PENSIONS

France’s pension system: How it works and what does Macron want to change?

French labour unions have vowed a wave of strikes against a pension overhaul promised by President Emmanuel Macron, a centrepiece of his drive to reform vast swathes of the economy.

France's pension system: How it works and what does Macron want to change?
Photo: LUDOVIC MARIN / AFP

Previous governments had already increased the number of years of work required to receive a full pension, but Macron's reform would replace dozens of separate systems with a single and entirely new regime.

Macron says the current system is too complicated and discourages labour mobility, and could be facing a deficit of 17 billion euros ($19 billion) by 2025 if nothing is done.

The government is to unveil details of the plan next week, but here are some of main elements that have been presented to union leaders during negotiations in recent weeks.

How does it work now?

France's current system is one of the most generous in the world, with private-sector employees eligible for pensions based on their 25 best years of salary — in the public sector, pensions are based on their last six months of salary.

On average, pensions are 75 percent of workers' pre-retirement earnings, compared with an OECD average of 58 percent. It is a defined contribution system, meaning pensioners get a guaranteed amount based on their earnings over their careers.

People born in 1973 or later must work a total of 172 quarters, or 43 years, for a full pension.

The official retirement age is 62, but people who quit without enough quarters will see their pensions reduced.

On top of the main system is a compulsory top-up regime that uses a points-based scheme, where points are accumulated based on salary and converted into pension payouts at retirement.

However there are also 42 “special regimes” for a range of workers including civil servants, dockers, lawyers, and employees of state rail operator SNCF and the Paris public transport operator RATP.

They provide for earlier retirement and more advantageous pensions originally offered as compensation for arduous work.

As a result, the average French person retires at 60, three years earlier than elsewhere in Europe, and four years before the average for wealthy nations in the OECD.

Public spending on pensions represents 14 percent of GDP — only Greece and Italy spend a higher proportion in Europe.

What would change?

During his 2017 presidential campaign Macron promised to implement a “universal” system that would do away with the special regimes.

A points-based system would be applied to everyone, which Macron said would ensure that “for each euro contributed, everyone gets the same pension rights.”

“We won't touch neither the retirement age, nor pension amounts,” he said in his campaign manifesto.

Yet the single system would allow for adjustments down the road which would enable the government to reduce deficits as the population ages and people live longer after retiring.

The government has vowed to implement the system gradually, so as not to impact older workers.

It has been negotiating with unions since August, but only the moderate CFDT, the largest private sector union, backs the idea of a single system — as long as the official retirement age of 62 is not touched.

The hard-line CGT and Force Ouvriere, more dominant among public-sector employees, has denounced a plan they say will effectively force millions of people to work longer or face curtailed benefits.

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