PARIS — Emmanuel Macron’s response to the Yellow Jacket protests has been specific and decisive. Since the beginning of the year, the French president has announced €17 billion of additional spending — benefits and tax reductions for people having trouble making ends meet.
He has announced a three-year freeze on school and hospital closures, new procedures for holding local referendums and introduced a measure of proportional representation in the next national election. But he has had relatively little to say about France’s most important economic challenge: bringing down unemployment.
During his election campaign, Macron suggested he would not run for a second term unless he first brought unemployment down to 7 percent. When he took office, it was 9.1 percent. It is now 8.8 percent. By comparison, Germany is at 3.1 percent and the U.K., for all its troubles, at 3.9 percent.
At this rate, France will be far from Macron’s goal when the 2022 election campaign goes into full swing, and so it is unlikely he will be reelected.
France’s challenge is hardly unique. Like other developed nations, it is struggling with the fallout from global competition and technical change which, while contributing to growth worldwide, have hollowed out good jobs at home.
Under France’s archaic labor laws, some poorer workers can make more money by alternating short-term contracts (often two weeks) with frequent spells of unemployment.
What sets France apart is the complex regulations that stifle its labor markets. If Macron is to provide durable answers to citizens who feel frustrated and left behind, he must first free his country of those shackles.
France is one of the countries in Europe where it is most difficult for an employer to close one plant in order to open another. Macron promised on the campaign, and quickly enacted after his election, a series of labor ordinances designed to change those conditions. A wave of optimism swept through the business sector, and expectations of change sparked a modest revival of investment.
But he left the job half done, and the specter of government intervention continues to loom over the labor market.
Two key measures could make a big difference.
French President Emmanuel Macron | Michel Euler/AFP via Getty Images
The first would be to free individual collective bargaining of the stultifying precedence of the sectoral agreements (contrats de branche), which are negotiated between one or more of the principal national unions and the principal employers’ associations.
These cover everything from standard wages to hours and redundancies. On average, just 8 percent of employees in the private sector belong to these unions, and the small and medium sized enterprises that are central to France’s economic fabric have very little say in the negotiations.
The tradition in France is for the minister of labor to automatically apply the outcome of the negotiations to every firm in the sector — but there’s no legal obligation that it continues to do so.
Germany provides an example of doing things differently: There, the extension of sectoral agreements to individual contracts is the exception rather than the rule. Doing the same in France wouldn’t require new legislation; it would be a simple, political decision.
The second thing Macron could do would be to change unemployment compensation regulations.
Under France’s archaic labor laws, some poorer workers can make more money by alternating short-term contracts (often two weeks) with frequent spells of unemployment, than they could have earned had they been continuously employed for the same amount of time.
Some unions have argued that the cost reductions should be offset by increases in the payments made by employers.
The administration has estimated that 600,000 workers are in this situation. If these provisions were changed, many of these workers would quickly be off the unemployment rolls.
This measure might be more difficult to implement. Eliminating these inefficiencies would inevitably make public payments less generous. Some unions have argued that the cost reductions should be offset by increases in the payments made by employers, particularly by those whose workers rotate most frequently through short-term contracts. While Macron has said he is determined to change the system, the employers who would be affected are blocking reform.
Neither of these two measures would protect France from the possible fallout of U.S. President Donald Trump’s tariff wars or Brexit. But they would enable the country to profit fully from any global recovery, and, in the medium term, to shed the shackles of one of Europe’s least business-friendly labor regulations. Full employment, without which harmony and social justice will remain a distant aspiration, would become possible.
George de Menil is professor at École des Hautes Études en Sciences Sociales (EHESS)