Macron Outlines Plans to Overhaul France's Labor Laws

By William Horobin Features Dow Jones Newswires

Emmanuel Macron's government on Wednesday outlined its plans for overhauling France's labor laws, the first test of whether the 39-year old president has the mettle to deliver reforms his country has eschewed for decades.

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Mr. Macron is seeking to revamp more than 3,000 pages of labor regulations that employers say discourage hiring by making it complex and financially risky to dismiss workers. The proposals unveiled by his government range from giving companies greater leeway to work around sector-wide rules usually determined by unions to capping fines for unfair dismissals.

The proposals will be refined and amended over the summer in preparation for the government to decree the changes in September.

"Our labor code no longer responds to economic reality and puts the brakes on growing businesses and job creation," government spokesman Christophe Castaner said after the plans were presented at a cabinet meeting.

Delivering labor reform is a major test of Mr. Macron's authority, two months after he won election as president putting such change at the heart of his campaign.

The French leader says the changes to employment regulations are needed to stir the economy after years of high unemployment and low growth, and to restore France's credibility in Europe. Mr. Macron says that unless the country brings its labor laws more in line with its European peers, he will struggle to push Germany and the eurozone's richest members to provide a larger financial backstop for the bloc to cushion against future shocks.

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German Chancellor Angela Merkel signaled last week she is open to some of Mr. Macron's more ambitious demands, such as a eurozone budget and eurozone finance minister. But officials in Berlin still want to see evidence the youngest ever French president is making progress on labor reform.

Making deep changes to French labor laws proved too great a challenge for many of Mr. Macron's predecessor's. The government of Socialist leader François Hollande, in which Mr. Macron served as economy minister, repeatedly scaled back attempts to change labor laws when faced with organized opposition.

To overcome the opposition, Mr. Macron is moving quickly to capitalize on his popularity among French voters. The National Assembly, where he won a commanding majority in elections earlier this month, is expected next month to give the government the power to change employment regulations by decree, a procedure that reduces the risk of lengthy and divisive parliamentary tussles. The government will then negotiate the details of the decrees with unions over the remainder of the summer, a period during which unions traditionally struggle to organize large strikes or demonstrations.

The radical leftist union CGT has called for a day of strikes and demonstrations on September 12, but other unions are cautious and haven't yet launched nationwide efforts to oppose Mr. Macron.

"I am neither naive nor suspicious," Jean-Claude Mailly, head of the Force Ouvrière, said Wednesday in an interview with French daily Le Monde. "The negotiation isn't useless," he added.

Mr. Macron's wants to allow employers to negotiate deals with employees that would trump sector-wide rules on some working conditions. Other proposed measures include capping fines for unfair dismissals, merging different employee associations and limiting the time for employees to appeal dismissals.

The government also wants to change rules for determining whether an international company can justify layoffs in France. Currently, many companies are barred from laying off employees if a subsidiary in another part of the world is considered in good financial health.

Business associations have saluted Mr. Macron's plans, saying they could encourage foreign investment and hiring at smaller French companies, who are reluctant to recruit because of the financial risks of layoffs and rigid work contracts

"If Mr. Macron takes this through to the end, it will be a really deep reform of the labor code," said Baudouin de Moucheron, a senior partner specializing in labor law at Gide Loyrette Nouel.

Write to William Horobin at William.Horobin@wsj.com

(END) Dow Jones Newswires

June 28, 2017 10:56 ET (14:56 GMT)