this article is also available as a podcast. Click on the link at the end of the article to listen.

President Macron is driving through the most hard-hitting anti-worker measures in France since the war.  The reforms not only consolidate the controversial El Khomri labour reforms brought in by decree under his predecessor Hollande, but roll back decades of other protective legislation.  Also targeted in the longer term is the centralized system of public services and ‘fonctionnaires’ (public sector workers) established in 1945 as a concession to the power of the Communist-led Left after the war.

With the highest public expenditure in the world as a percentage of GDP, France cannot compete with lower wage rivals in the EU, particularly Germany and the UK.  Macron’s budget cuts of €50 billion will give France a better chance in the race to the bottom.

In line with Germany’s insistence on tight finances, Macron plans to shrink France’s deficit to 2.6% of GDP in 2018, below the 3% limit set out in the Maastricht Treaty.  The method is to follow the UK in creating a workforce with fewer rights and stripped back welfare, driving down wages across the board.  A shrunken public sector will go hand in hand with increased privatization.  The government has stakes worth around €100bn in 81 companies, and Macron so far plans to privatize around a tenth of these.

French Labour Minister, Muriel Pénicaud, a former boss of Danone, believes the current Labour Code is a shackle that constrains French companies.  Macron justifies its removal by citing “flexicurity” – the Danish model that claims to offset reduced job security by providing training for a flexible jobs market underpinned by state benefits.  He also believes his measures will shrink France’s high unemployment rate of 9.5% (25% youth unemployment), more than double that of the UK and Germany.  In reality, as in the UK, in-work poverty will simply grow.

Macron’s draconian measures will destroy national collective bargaining by allowing smaller companies – the vast majority of French business – to foist agreements on individual workers regarding working hours and pay, outside union negotiations.  The atomization will weaken employment rights.  At the same time, union representation on company committees is being significantly weakened, with budget cuts to the works councils which negotiate with management and reduction in their influence through their merging with health and safety committees into single “social and economic committees”.

Other reforms include capping damages for unfair dismissal at 20 months salary for those with the longest service, and limiting the time for any appeals to a year.

The measures will effectively scrap permanent employment contracts by limiting their duration to particular projects – following the short-term contracts in the construction industry.

They will also scrap the law preventing foreign companies from firing French workers when a company performs badly at national level (even if, for instance, a multinational company is profitable internationally).  Some of the first victims will be the soon-to-be sacked workers at PSA Peugeot-Citroën, accelerating the deindustrialization of France, which has lost a quarter of its manufacturing workforce since 2000.  From now on multinationals will have far more room for movement when they want to relocate to lower wage economies.