Skip to main content

How the EU pushed France to reforms of labour law

Corporate Europe Observatory

The current struggle in France over labour law reforms is not just between the Government and trade unions – a European battle is waged. The attacks on social rights stem in no small part from the web of EU-rules dubbed 'economic governance', invented to impose austerity policies on member states.

Strikes and actions across France against reforms of the country’s labour protections, known as the El Khomri Law, demonstrate the immense unpopularity of the measures proposed by the French Government. Chiefly among them, to give preference to local agreements on wages and working conditions, when the conditions in those agreements are less favourable than the national norm inscribed in national law. This is an open attempt to undermine collective bargaining and roll back the influence of trade unions.

Ultimately, the French Government has formal responsibility for the weakening of labour protection. But there is no denying that the European Union is playing an important and perhaps decisive role in the attacks on labour rights. What we see is the EU throwing its rulebook in the French workers’ faces. Practically all the new rules on so-called 'economic governance' adopted following the eurocrisis have been applied, and make France look like a EU test-case. The European Commission, with the backing of the Council, has used the rules on member states’ deficits to exert pressure, threatening with sanctions, should the French Government not give in and seriously reform its labour laws. Simply put, France has been required flat out to ensure higher profitability for businesses by driving down wages.

How does all of this work?

Sanctions more likely today

First and foremost, the reforms in France are related to the country’s deficit. Like most other EU member states, the state’s finances looked pretty bad in the aftermath of the 2008 financial crisis. In 2009, a case was opened against France for breaching EU rules which stipulate that its deficit must be no higher than 3 per cent of GDP. If taken to the extreme, this 'excessive deficit procedure' can result in a fine of billions of euro, and – not least in the case of France – a severe loss of face to its EU partners.

The 'excessive deficit procedure' was given more teeth with the so-called 'Six-Pack' set of EU rules in 2011 – a key part of the austerity-focused economic governance package – which introduced a reverse majority vote in the Council: if the Commission does decide to fine a member state, like it has threatened to do to France, there will have to be a qualified majority against the measure from other member states to block it. Good reasons for the French Government to be slightly scared – and a weapon to be used in its attempt to convince parliamentarians. The likelihood of sanctions for not meeting the budget deficit targets is much bigger than in the past, when both Germany and France escaped humiliation. But how to meet the Commission’s strict targets, and how to behave to the satisfaction of the Commission, is what clearly links the El Khomri law in France to the austerity regime being rolled out from Brussels.

Enabling demands of 'structural reforms'

Being 'in the procedure', means you’re under close surveillance by the Commission, and with regular intervals, the case of the French deficit has been brought up at meetings with member states ministers, who have assessed if France (in this case) has made sufficient efforts to remedy the problem. Specific recommendations have been made, though until 2013 the labour law was hardly mentioned. The recommendations stuck to the development of the deficit, whether it went down at the required pace. But in 2013, there was a new tone in the Commission’s recommendations. France was asked to meet its deficit targets “by comprehensive structural reforms” in line with recommendations from the Council “in the context of the European Semester”. Structural reforms are no small matter. They are defined as changes that affect “the fundamental drivers of growth by liberalising labour, product and service markets”. Such ambitions were starting to be pushed on France at the European Semester.

But what is the European Semester? It is a procedure involving the Commission and the Council that ends with a set of recommendations for reforms to each and every member state, based on a proposal from the Commission. At the beginning in 2011, the recommendations were non-binding, but in 2013, a new set of rules went into force under the so-called Two-Pack, another part of the economic governance package intended to enforce austerity. One of the regulations of the two in the package was about measures to ensure deficits were corrected, and among other things, it made a link between the deficit procedure and the European Semester. If a member state is under the deficit procedure – like France – it would have to draw up an 'Economic Partnership Programme' that includes the recommendations from the Council –typically the kind of structural reforms that would have a clear impact. If the programme is not followed, then it will have a bearing on the Commission’s decision to initiate the final phase of the deficit procedure: sanctions in the form of a fine worth billions.

So, when the Two-Pack entered into force in early 2013, the tone of the messages to France on its deficit changed. France was now asked to implement “comprehensive structural reforms” of its labour law and the pension system. This had a bearing on how France would be treated under the deficit procedure and whether it would come in for sanctions, and for that reason, recommendations started looking more like demands.

In other words: whereas earlier country specific recommendations adopted under the European Semester were just that, with the Two-Pack from 2013, non-compliance could lead the Commission to take the next step towards sanctions.

"Slash wages now!”

There’s more. In the early stages of the eurocrisis another procedure was introduced that was to work in parallel to the deficit procedure: the 'Macroeconomic Imbalance Procedure'. This procedure allows the Commission to monitor the development of member states’ economies based on a predefined set of indicators. One of them – perhaps the most important one – measures how high the labour costs are developing (unit labour costs). If wages are not kept at bay, competitiveness suffers, and measures have to be taken, so the logic goes.

The 'Macroeconomic Imbalance Procedure' is also a potent weapon, as it can lead to a fine if a Eurozone member state crosses the line repeatedly and for a long time. And France has been in the crosshairs of the Commission for quite a while. Commission staff has investigated French labour law and identified what factors contribute “to limiting the ability of firms to negotiate downward wage adjustment”, and the French Government has been warned – as has many other member states – about developments in wages. In 2014, the Commission said “unit labour cost growth is relatively contained but shows no improvement in cost competitiveness. The profitability of private companies remains low, limiting deleveraging prospects and investment capacity.”

The calls for action to improve the profitability of private companies have been sent to France from Brussels on numerous occasions over the past couple of years, and have gained in strength. Thus far, the climax was in February 2015, when the Commission stepped up the procedure and singled out Bulgaria and France as the most pressing cases. The decision put France only a small step from the last stage of the imbalance procedure, the dreaded 'excessive imbalance procedure' which entails – exactly like the deficit procedure – a massive fine. If all fines are put together – from the deficit procedure and the imbalances procedure – they could amount to 0.5 per cent of GDP, or in the case of France, approximately €11 billion.

The final countdown

Such a prospect must be terrifying for the French Government, and in 2015, then, it would have to come up with something of substance to appease the European Commission and its partners in the Council. In March France was given two more years to bring its house in order, and if there was any doubt over the way to get there, the message to France in July was clear. Country Specific Recommendation number 6 to France under the European Semester, includes a call to “reform the labour law to provide more incentives for employers to hire on open-ended contracts. Facilitate take up of derogations at company and branch level from general legal provisions, in particular as regards working time arrangements.” In other words, the very reforms now at the centre of dispute with the El Khomri law.

The recommendation was copy-pasted from a Commission proposal; one that struck a chord among business lobby groups. In the annual 'Reform Barometer' of BusinessEurope, a procedure set up to influence the European Semester, the French employers association MEDEF was enthusiastic about the move, and dubbed it “extremely important” in its contribution to the Reform Barometer 2016.

End game

Who exactly has done what since the summer of 2015 is the subject of intense debate. French media outlet Mediapart suggests the German Government might have played a big role in designing the French reforms, while others believe the specifics were entirely homemade. In any case, there is no denying that the reforms were pushed heavily by the European Union, more specifically by the Commission and the Council. And the push was based on the web of rules on member states’ economic policies, sometimes called 'economic governance', that has been spun thread by thread since 2010. The strengthening of the deficit procedure, the European Semester, the Two-Pack, and the macroeconomic imbalance procedure have all been used for the purpose they were invented: to exert maximum pressure on member states to adopt austerity policies.

There are other similar examples in Europe at the moment. In Italy and Belgium too, you see the effect of the new tools handed over to the European Union since 2010. But France is special for its size and its power in the EU. The ongoing struggle in France can be seen as a major test case for European economic governance. If a big, powerful EU member state can be pushed to attack fundamental traits of its labour protection law, then the risk of new and stronger measures are much more likely in the future. Even if French workers are unaware of it, they’re fighting a European battle.

Source:

Comments

Popular posts from this blog

Donald Trump: the last symptom of a system that is about to collapse

globinfo freexchange
In another interesting interview with Chris Hedges, Richard Wolff explains why the Trump presidency is the last resort of a system that is about to collapse:
Finally, if everybody tries to save themselves (protection), we have a historical example: after the Great Depression that happened in Europe. And most people believe that it was a large part of what led to WWII after WWI, rather than a much saner collective effort. But capitalism doesn't go for collective efforts, it tends to destroy itself by its own mechanisms.
There has to be a movement from below. Otherwise, there is no counter force that can take us in another direction.
So, absent that counter force we are going to see this system spinning out of control and destroying itself in the very way its critics have for so long foreseen it well might.
When Trump announced his big tariffs on China, we saw the stock market dropped 700 points in a day. That's a sign of the anxiety, the danger, even in the min…

Austria has just returned to the Middle Ages

The Austrian government confirmed that the far-right is an emergency reserve of neoliberalism
globinfo freexchange
Haven't you yet convinced that the nationalists and the far-right are the most faithful dogs of the big capital? Then, look at what just happened in Austria. In the end, despite the mass protests in Vienna, Austrian employers will be able to introduce 12-hour working day without increasing wages. The relevant law adopted by the Parliament of the country, reports on Friday, July 6.



What's the first thing that Emmanuel Macron did after his election in France? He rushed to complete what Francois Hollande - the other puppet of the neoliberal establishment - had started: destroy trade unions, completely deregulate the labor market.
Yet, the media in France were promoting him as a 'progressive' (what a joke) who will stop the far-right threat.
In reality, big capital’s reserve, Marine Le Pen, is waiting in the 'bench', ready to take action any moment, now tha…

WikiLeaks reveals Italian officials had serious concerns about Italy's ability to participate in the monetary union already since the late 70s

The WIKILEAKS Public Library of US Diplomacy (PlusD)holds the world's largest searchable collection of United States confidential, or formerly confidential, diplomatic communications. As of April 8, 2013 it holds 2 million records comprising approximately 1 billion words. The collection covers US involvements in, and diplomatic or intelligence reporting on, every country on earth. It is the single most significant body of geopolitical material ever published. The PlusD collection, built and curated by WikiLeaks, is updated from a variety of sources, including leaks, documents released under the Freedom of Information Act (FOIA) and documents released by the US State Department systematic declassification review.
globinfo freexchange
A 1978 cable from the US Bureau of Economic and Business Affairs to the Secretary of State, was monitoring in detail the Italian serious concerns on the perspective of Italy joining the European monetary union. It describes an atmosphere of anxiety insi…

The vicious circle of modern slavery

globinfo freexchange
It sounds unbelievable, but in one of supposedly the most advanced European nations, the government plans to allow the working day to be extended to 12 hours!
We are talking about Austria, where tens of thousands of people in Vienna packed the streets on Saturday to voice their opposition to loosening labor laws to allow for a 12-hour workday and subsequent 60-hour workweek. Police in Vienna said some 80,000 people took part, while the trade unions that organized the protest said some 100,000 people attended.
What can someone say about this unimaginably absurd decision?
In an age of all this advanced technology, with AI and hyper-automation, people should work less hours, enjoying all the benefits and extra free time for their families and themselves. Yet, in the homeland of Austrian economics that led us to brutal neoliberalism, it seems that the elites push things to the opposite direction. Why? Is it just because human labor can't compete the machines?
Think ab…

Bernie's revolution starts to wipe out the establishment with a huge political earthquake!

globinfo freexchange
It happened! A 28-year-old super-progressive beat the personification of the establishment in the Democratic primary! Alexandria Ocasio-Cortez won the Democratic primary in New York's 14th congressional district, defeating the establishment baron, Joe Crowley. This has been described by many, rightfully, as the biggest upset victory in the 2018 midterm election season.
What are the origins of this amazing, unprecedented result in the US political process?
We can find them in the 2016 Democratic primaries. Back then, Bernie Sanders put the foundations of a truly progressive movement that could beat the neoliberal establishment. We wrote then that Bernie speaks straightly about things buried by the establishment, as if they were absent. Wall Street corruption, growing inequality, corporate funding of politicians by lobbies. He says that he will break the big banks. He will provide free health and education for all the American people. Because of Sanders, Hillary w…

Corporate media pundits depict establishment's evident panic in front of Alexandria Ocasio-Cortez's huge victory

globinfo freexchange
Shortly after recent political earthquake with Alexandria Ocasio-Cortez's huge victory, the establishment apparatus started to react as expected.
TYT immediately responded by identifying the common narratives used by the corporate media pundits in the following video:

In this video you can track at least two kinds of typical 'arguments' provided by the neoliberal ideological framework. We wrote several times in this blog about such arguments that their carriers present them as being perfectly rational using 'logical leaps', while in reality, they are deeply irrational.
In the first argument, Steve Schmidt labels progressivism as 'dishonest', simply because it fights for free education, free healthcare, etc. The basic 'argument' is the usual: ordinary people can't have such things because of the enormous debt. Of course, the logical leap here is the fact that the neoliberal pundits always avoid to refer to the billions in bailout…

Key parts of the Matrix: the faithful little soldiers of the mainstream media

globinfo freexchange
Ludivine Bénard describes almost perfectly a key part of the Matrix of our times:
Journalistic titles hire journalists whose social background – socially, culturally, educationally and morally – fits perfectly with what the current capitalist order asks for.
People working in media are mostly middle-class types with the same interests, favouring consumerism, hedonism, libertarian individualism and unconditional Europeanism from Brussels. And they're all subject to this form of political illiteracy – they reduce reporting on politics to reporting on political personalities. The journalists and pollsters in the press turn political life into a theatrical stage, where personalities just endlessly talk and debate.
All that talk drowns out any serious criticism of the system.
The French people have been indoctrinated that way for decades – we've had more than 30 years of a certain consensus between the centrist powers of the conservative right of Les Républicains…

The 'anti-establishment' Trump admits he is more elite than the elite!

globinfo freexchange
He said it!
From the first moment in this blog, even before Trump's election, we repeatedly said that Donnie is only a reserve of the establishment.
Finally, he essentially admitted that he is more elite than the elite! Or, more establishment than the establishment if you like. During a campaign rally in Duluth, Minnesota, Trump said "Why are they elite? I have a much better apartment than they do. I'm smarter than they are. I’m richer than they are. I became president and they didn't."
Kyle Kulinski is right. Donald Trump wants to be fully integrated in the Establishment Inc. He wants to be loved by the elites, join them. He sends signals to them, saying 'I did what you want, why don't you play with me?'.
The message to the American citizens is this: do not trust the orange clown. In case that will grab your vote for a second term, he will do whatever the establishment wants, and more. Meaning, more tax-cuts for the rich, more for-pro…

The real E CORPs seek complete control of global food supply

Who controls the food supply controls the people; who controls the energy can control whole continents; who controls money can control the world
globinfo freexchange
In the famous TV series, Mr. Robot, E Corp (which the central character, Elliot Alderson, perceives as Evil Corp), is an extremely powerful company that controls societies through consumer debt.
Yet, in the real world, a couple of mega multinationals could be proved even more ruthless. In another interesting report, James Corbett exposes the ultimate goal behind the merge of two of the biggest corporations in the food, medicine and agricultural sector. These are the real ECORPs:
What does a pharmaceutical giant have to gain from buying out and merging with an agrichemical giant, especially one that carries as much baggage as Monsanto?
If the connection between these corporate behemoths seems tenuous, then perhaps the key to understanding it is presented in that 1995 quote from former Monsanto CEO Robert Shapiro: “We’re talking…

Russia ready to 'grab' the Visegrad group in the geopolitical warfare

globinfo freexchange

The news are indicative of the growing gap among the EU members.
Leaders of the Visegrad Four countries of Hungary, Poland, Slovakia and the Czech Republic will skip a mini summit on migration this weekend, Hungarian Prime Minister Viktor Orban said on Thursday. Orban said such meetings should be organized by the European Council, the bloc’s top decision-making body, not the EU Commission. The Commission will organize the smaller summit ahead of a full EU summit due next week, Reuters said. Speaking in Budapest after a meeting of the Visegrad Four leaders, Czech Prime Minister Andrej Babis said the EU border agency Frontex should be strengthened and its forces beefed up substantially. Babis said he agreed with German Chancellor Angela Merkel on this, and believed Frontex should be increased to 10,000 staff.
The latest years, Visegrad group countries have strengthened ties, as a result of the total failure and inability of the EU mechanisms to deal with the huge refu…