France Unveils Contentious Labor Overhaul in Big Test for Macron

Mr. Macron’s changes make it easier to hire and fire workers and allow some workplace issues to be negotiated at the company level, rather than with national unions, in hopes of stimulating both growth and job creation. The government focused especially on smaller businesses with fewer than 50 employees — the majority of French businesses — which have complained bitterly about excessive red tape and regulations.

“This reform brings a radical change, a big bang in the functioning of the French labor market,” said Gilbert Cette, an economist at the University of Aix-Marseille. “This is a new approach that turns the market upside down completely,” he said, referring to the decentralization of labor negotiations especially for smaller companies.

The step by France was also important to Europe, where far-right and populist forces have fed on economic stagnation as well as on the disruption caused by globalization. The new step by Mr. Macron tries to answer both those challenges, belatedly, on France’s own terms.

France had put off fundamental changes to revitalize its economy far longer than its European Union partners. Germany crossed that Rubicon in the 1990s under Chancellor Gerhard Schröder. More recently, painful changes were forced upon a host of other nations by the euro and debt crisis.

“There’s no long term sustainability for the eurozone if France is not managing to reform structurally like for example what Spain did, what Portugal did a bit, what Ireland did,” said Karel Lannoo, the chief executive officer of the Center for European Policy Studies, a research organization in Brussels.

“If one of the core partners doesn’t reform or just piggybacks off Germany, then one day or another, the currency collapses,” Mr. Lannoo warned.

Others agreed.

Roughly 15 years ago, “France and Germany had economies that were more or less comparable, and that ceased to be the case because the Germans wisely did microreforms and the French did not,” said Sebastian Mallaby, senior fellow for international economics at the Council on Foreign Relations.

So the French ended up with “high unemployment, which fed populism, and getting out of that trap is vital to a country where the ratio of public debt to GDP on current trends would eventually turn France into Italy,” Mr. Mallaby said.

A more economically sound France will have more influence with Berlin, and could help soften Germany’s…

Read the full article from the Source…

Leave a Reply

Your email address will not be published. Required fields are marked *