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French report
by Euro Reporter
2016-05-30 10:32:53
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France's socialist president is taking a very not socialist approach to fixing the unemployment crisis

While not a shocking statement — striking is seemingly as synonymous with French culture as the stereotypical image of a cigarette-wielding Frenchman in stripes and a beret — these strikes, over a proposal to reform the nation's labour laws, have brought France to a near standstill. In a country where nuclear power production runs 75 percent of the electricity, nearly 16 of the 18 plants are said to be affected by the strikes, the BBC reported. 40 percent of the country's gas stations have almost depleted their fuel supply because of strikes at six of France's eight major oil refineries. Roads and highways and tunnels have been blocked; there are no newspapers on the stands as printers and distributers have ceased production. And the labour unions are showing no sign of backing down. It's a fight over labour laws — and one that isn't remotely new.

french_400As the nation reaches record high unemployment numbers, the French government says it wants to reform labour laws to encourage hiring. The reforms would give employers more leeway to negotiate holidays and special leaves, reduce pay, and fire employees. The theory is that if you make it easier to get rid of an employee you've hired, businesses will be more eager to bring some new ones on. But despite weeks of protest in France's largest city centres, French Prime Minister Manuel Valls, said it is his "responsibility" to make sure the bill is pushed forward. He's even implementing a rarely used constitutional measure that has allowed the text to skip parliamentary debate in the National Assembly and head straight for the Senate. To politicians on the left, the reforms are seen as socialist President François Hollande's attempt to break with the party for more centrist policies. To the protesters on the streets, the reforms are an affront to worker's rights — and to French national identity. But Hollande desperately needs to curb unemployment to sell his term in office as a success, and the structures of the European Union deny him the ability to use most of the kind of tools you would normally expect to see from a left-wing president.

Consequently, Hollande, elected four years ago after running a Bernie Sanders-esque campaign to take down the wealthy and reinforce social safety nets now finds himself staking his political future on a plan to do the opposite. Some problems are inherent to the passing of time: Operating the Metro in Paris no longer requires employing 10 people to check passenger tickets. Like in many advanced economies, the advent of new technology has shifted France's labour market in the last decades. Some jobs have become redundant, and the labour demands in France's robust agricultural industry have decreased. Structural unemployment — where the workers do not have the skills the job market is demanding — has become a major problem. "There are not enough jobs for everybody, and a lot less blue collar jobs," says Philippe Le Corre, a visiting fellow at the Brookings Institute's Centre on the United States and Europe. "That is a fact of life." This has been compounded by a domestic recession in 2008 and Europe's debt crisis in the later part of 2009 and onward. GDP is growing, but too slowly. According to the Financial Times (paywall), GDP will need to grow by at least 1.5 percent per year to accommodate college graduates entering the job market. Recent graduates and people over the age of 54 have been most affected by the unemployment crisis.

In the last decade, France's unemployment rate has hovered around 9 percent — in March it reached above 10 percent. In contrast, the United States' unemployment rate has averaged around 5 percent — where it is now — during that same time period. France's very low inflation rate suggests that more aggressive monetary policy from the European Central Bank could boost job creation, but the French government doesn't control the ECB. Fiscal stimulus — like a large, temporary cut in France's 20 percent consumption tax — could also create jobs, but it would violate the European Union's fiscal rules. Consequently, France's left-wing government feels it has no real option other than rolling back labour market protections. But unlike the United States, France has robust worker's rights laws in place. The 35-hour work week is an institution; employees are entitled to strongly regulate paid leave. Most of all, it is not possible to hire and fire people "at will." Firing workers is expensive, time-consuming, and can only be done with specific reason.

But companies can skirt these rules by hiring "temporary" workers who are less subject to these regulations. The use of temporary workers creates secondary problems. Many younger French people find themselves working on a series of temporary contracts, denied the social standing and economic security of a normal regulated job. And older workers with non-temporary jobs now face a massive disincentive to job-switching, since to hop to a new company they might have to give up their privileged status. "In economies like the US, the churning and the labour flows — in and out of unemployment and employment — is quite fast," says Pascal Marianna, an employment expert with the Organization for Economic Cooperation and Development. "The reforms can have quite an impact smoothening these flows, increasing the flows in and out of employment and making the reallocation of labour more efficient." This year Hollande called the situation an "economic state of emergency," and France's Minister of Economy Emmanuel Macron, a 37-year-old former Wall Street investment banker, said the government has no choice but to push reforms. "We have to keep on pushing and accelerating these reforms because we have a 10 percent unemployment rate and it's too high," Macron told CNBC. "What we need is much more flexibility for the labour markets, because the rigidity is killing opportunities for new jobs."

Other European countries have already started pushing these reforms — Germany implemented similar changes over a decade ago, a controversial move that divided then-Chancellor Gerhard Schroeder's Social Democratic Party but which the current German government regards as having laid the foundation for the country's success in bringing unemployment down to 4.7 percent. "If you compare with countries that implemented reforms years back, it is true that we can say that implementing reforms will provide positive results in France," Marianna said of Germany. "That is the line of reasoning, comparing countries in the eurozone, because we all have the same currency." Historically, implementing these reforms has been more difficult for France, but there's been a continual push this basic direction:

In the 1990s France implemented pension reforms.

In 2006 there was a failed attempt to loosen worker's protections.

In 2010, then-President Nicolas Sarkozy raised the retirement age from 60 to 62.

Last year Macron pushed a law that chipped away at labour market regulations, including allowing more retail stores to stay open on more Sundays.

But all of these reforms were met with protest. Today's protests don't yet compare to those in the 90s, which effectively shut France down, Marianna said, but there continues to be substantial resistance to these kind of deregulatory moves. It's because France is old school, writer Lucy Wadham says in the Guardian: France is a nation built on grand ideals. Ideals of equality, freedom and fraternity. It is not well equipped for such base concepts as economic reality, compromise and negotiation. It does not seem ready either to invite fully its women (or, indeed, its Muslims) into the conversation about what sort of society to build in this climate of constant economic flux. The labour code is built on this notion that everyone must have a statut. Each profession has a specific statut and forms part of a corps de métier, a clear echo of the medieval guild. Clearly this system might not lend itself readily to the kind of professional mobility and reinvention required to succeed in the digital age. And French unions, whose negotiations help set labour practices for most French workers even though actual membership rates are relatively low, continue to be the loudest voices in defence of a cultural heritage of strong labour market protections.

Last year, when France saw labour protests from the country's taxi force in response the Uber's encroaching shared economy, Vox's Zack Beauchamp illuminated the mentality of French unions as always eager to flex political muscle: Because French unions get so much of their clout not from their membership but from favourable laws, which could theoretically be repealed at any time, the unions are paranoid. They're more willing to fight any policy they don't like now — because they might not be able to fight in the future. But the protests also represent a backlash against a government that is widely mistrusted. Voters brought Hollande into office to replace Sarkozy expecting to find an alternative to the push for market-oriented reforms, but he hasn't found a feasible alternative strategy for job creation. "There is resentment against a party and a president who is basically doing the exact opposite," Le Corre said.


Labour law protests shadowed by police brutality in France before Euro 2016

Amid a fresh wave of protests over a bitterly disputed labour law, many videos showing police and security forces apparently using disproportionate force on labour protesters have attracted viewers and controversy, including a police officer aggressively shoving a woman and throwing her to the ground. The incident, which took place on Thursday in Toulouse, shows a policeman pushing a young woman from her shoulder and grabbing her by the neck before she falls to the ground. A bystander helped her stand up while the officer was uninterested in the woman's situation. French authorities ordered the removal of some of the videos showing police using violence on protesters, saying they posed a threat to security forces. French media has also been criticized on social media for not airing videos showing security forces using disproportionate force and for paying little attention to the issue. The video was only one of the many disturbing scenes that have been unfolding cross the country as thousands of people protest a controversial labour law proposal.

The escalating unrest, which has gathered pace over the last week and sparked petrol shortages that forced the government to dip into strategic fuel reserves, comes just weeks before football fans flood into the country for the Euro 2016 championships, which has been heightened by security concerns amid waves of protests and fear of terror attacks. The reforms would give employers greater freedom to cut pay and lay off workers. They would also weaken unions' power to negotiate with firms on issues such as working hours, which in France average 35 hours a week. Unions say the changes proposed in the law favour companies at the expense of workers' rights and are demanding that the new labour law be scrapped. Despite the protests, the government has remained defiant, with riot police on Friday moving in to clear blockades outside petrol depots, and French President Francois Hollande vowing not to give in to union demands. Hollande's tough line was echoed Saturday by French Prime Minister Manuel Valls ahead of talks with bosses in the oil and transport sectors, the two sectors worst hit by the protests. "My responsibility as head of government is to ensure that people can buy petrol and that businesses won't be penalized by the blockages," he said, pledging to defend the law "to the end."

Saturday's talks were aimed at taking stock of the gasoline shortages following the partial or total closure of six of the country's eight refineries. Several of the sites have been operating at reduced capacity due to the ongoing union action. Hoteliers and restaurateurs have reported "major cancellations" in Paris and in the west over the strikes and petrol shortages. With most of the depot blockades cleared by police on Friday, the situation was much improved although the government said around 20 percent of petrol stations were still suffering shortages. Transport Minister Alain Vidalies cautioned Saturday, however, that it was too early to say the petrol crisis had been resolved. Francis Duseux, head of the Ufip oil industry federation, saw progress and said, "Over the past two days, the situation has considerably improved." Nonetheless, further protests are expected next week with strikes expected to hit the rail network, the Paris Metro and civil aviation on Tuesday. With petrol in short supply, many disgruntled motorists were forced to wait in long queues at service stations.

After a day of major protests on Thursday, which authorities said brought 153,000 people on to the streets – organizers put the figure at 300,000 – the eight unions opposing to the law urged demonstrators to "step up the mobilization." Earlier this week, France's civil aviation body appealed to airlines to fuel up abroad before arriving in Paris from European destinations to ensure they could make the return flight, in a move that Air France insisted was merely precautionary. Tourist bookings were also hit, with hoteliers nervous that Euro 2016 visitors may be put off by the industrial action. The CGT union that has led the protests has called for rolling strikes on the Paris Metro network to start on June 10, the day Euro 2016 begins, giving the organizers new headaches on top of security concerns sparked by last November's extremist attacks in Paris. The strikes come a year ahead of an election in which Hollande is considering standing again despite poll ratings that are among the lowest for a French leader in modern history.


France passes anti-terrorism law to expand search, detainment powers

French lawmakers on Wednesday passed an anti-terrorism law aimed at making it easier for authorities to search and detain people. The Senate voted in favour of the bill, which had already gone through France‘s lower house, the National Assembly, in March. It is due to take effect once it is signed by French President Francois Hollande.
The legislation was drafted following a series of attacks in Paris in November 2015, which left 130 people dead in restaurants, cafes, outside a national stadium and in a music hall. Measures in the proposal include the ability to hold people suspected of terrorist activity under administrative detention for up to four hours and to carry out house raids at night.
The law would grant greater powers for bag searches and espionage, and terrorist fighters returning from conflict zones would be able to be placed under one month‘s house arrest. It is also intended to bolster police powers for tackling organized crime. The measures have been the subject of fierce criticism from civil rights and human rights groups, who argue that exceptional measures under the country‘s current state of emergency could become enshrined as everyday police powers.

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