French Workers are Protesting Against Reforms Even a Socialist Says are Necessary

The European Championship soccer tournament that opens in France on Friday should be an opportunity for the country to showcase its wonderful scenery, world-famous restaurants, and historic sites.

Yet French unions, in protest against socialist President François Hollande’s new labor-law reforms, have impeded services from transportation to trash collection to food delivery in an effort to derail the new legislation—and make visiting soccer fans miserable.

No matter that reforms are vital because the French economy is stagnant. GDP growth for the latest quarter was 0.6%. Over the past decade, growth has rarely risen above 1%. The unemployment rate is over 10% and the youth unemployment is 25%. Clearly tax and regulatory reform, including more labor flexibility, are needed to encourage employers to hire.

As an example of the difficulty of firing workers, a French court this week ruled that Société Générale rogue trader Jérôme Kerviel, who lost $5.5 billion of the bank’s assets in 2008 and almost caused its bankruptcy, had been unfairly dismissed. Société Générale was ordered to pay Kerviel $511,000 because it decided he was dismissed “without cause.”

France has some of the strongest employment protections among the countries that make up the Organization for Economic Cooperation and Development. When employers cannot fire workers, they are less likely to hire them, leading to a sclerotic labor market and high unemployment. This is what the left-wing Hollande is trying to repair.

The preamble to the new labor-reform law states that the world of work is changing to permit the emergence of new forms of employment, new occupations and new jobs. The object is to give each worker the capacity to construct his professional path in the new world of work, a world that includes independent contractors.

Unions all over the world are against such flexibility. They want workers to be back in the 1950s, with no independent contractors and no online economy. But even the French Socialist government sees that its regulations are impeding competitiveness.

French unions see the reforms as a threat to their power, and are pushing back just as visitors pour into the country for the European Championship.

Much of French labor law seeks to prevent the French from working too many hours. This is considered harmful because it deprives others of work. President Hollande’s changes include the following:

Change in hours worked: French workers are now not permitted to work more than 10 hours a day. With the new law, the government would permit employees to negotiate an agreement to work up to 12 hours a day and 60 hours per week. 

Employment by the day: Currently, a company can pay a worker by the day, without paying them for overtime. However, they cannot work for more than 235 days a year and must have at least 11 hours of consecutive rest between days of work. Such agreements can only be instituted with a collective-bargaining agreement. The new law would allow this to be implemented without union approval upon the agreement of the employer and worker. 

Interns: French interns are limited to working for 35 hours per week and eight hours a day. The new law would allow them to work for 40 hours per week, 10 hours a day. They are currently allowed to do this only by negotiating with government authorities. Under the new law, interns and employers could decide by themselves, and inform the authorities of their decision.

Change in overtime pay: Currently, if the French work eight hours over the 35-hour work week, they have to be paid 125% of their wage rate. Beyond that, they have to be paid 150%. Under the new rules, workers could agree to work overtime for 110% of their base wage.  

New definition of “economic difficulty”: Only if a French company is in “economic difficulty” is it allowed to fire workers. Economic difficulty is defined as when the company is no longer operating and has no technological advancements. Under the new law, economic difficulty can be defined as the reorganization of work necessary for the survival of the company, a decline of demand, and a need to stay competitive. 

Compensation for unfair dismissal: The new system caps severance pay based on how long the worker has been on the job. Workers who have been with the firm for less than two years will get three months of wages, and workers who have been there for more than 20 years will get at most 15 months. This would prevent awards such as $511,000 to rogue traders.

Compensation for workers on call: French workers who are at home and who can be called into the office must be paid—even if they never work. The new law would allow on-call time (if the employee does no work) to count as rest time. This goes against EU regulations that require on-call workers to be paid.

Some view France as a worker’s paradise where the government protects workers from abusive employers. The reality is that France is a worker’s nightmare where jobs are scarce and work ethic is prohibited by law. Soccer fans visiting France can witness labor unions attacking the most socialist government in a generation trying curb the insanity that is French law.

This article originally appeared in Market Watch

Diana Furchtgott-Roth, former chief economist of the U.S. Department of Labor, directs Economics21 at the Manhattan Institute. You can follow her on Twitter here.

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