A week after the publication of the decrees detailing Emmanuel Macron’s much-awaited labour law reforms, the tone of comments by business leaders, the government and Macron’s ruling LREM party have been conspicuously moderate.
Prime Minister Édouard Philippe, in an interview with news weekly Le JDD published on September 2nd, said the reforms – which have taken up much of the three months since his appointment following Macron’s election in May – were “just the start”, and that no-one should expect too much from them. “Our reform is indispensable, but it is not a miracle remedy,” he told the weekly. “It is one of the instruments that must contribute to reducing unemployment.”
Philippe’s comments are perfectly in line with the arguments of the French employers’ federation, the Medef, which described the contents of the five decrees that detail the reforms (the government is using its constitutional right to bypass parliament and enshrine the reforms into law by executive order) as being an “interesting beginning” which were just a “first stage”. Medef vice-president Thibault Lanxade, speaking on Europe 1 radio on August 30th, warned that “there won’t be a wave of hiring” after the reforms are made law later this month. The implication is clearly that much more is needed.
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Such reactions might appear surprising. The reform of the French labour code was at the centre of Macron’s presidential election campaign, and he made it his priority as soon as he was behind his desk at the Elysée Palace. The use of decrees was a demonstration of the perceived need to act swiftly, giving priority to the fight against mass unemployment and to allow the necessary time for the reforms to have effect. Indeed, the need for time is all the more clear given that one aspect of the reforms is to give wider freedom to the different actors in labour negotiations. In his interview with news weekly Le Point on August 31st, Macron said he believed the reforms would take “between 18 and 24 months to infuse”.
But since the publication of the decrees, there is no longer just a question of allowing time for them to produce an effect, there is now apparently also the need to go further, given that they are just a “first stage”. The nuance is important, because the labour law reforms are by implication insufficient to counter mass unemployment.
This will to act quickly was, during his election campaign, explained by Macron as necessary to produce results in order to halt the rise of the far-right Front National party. That was what he argued when he appeared in a live-streamed video interview with Mediapart two days before the second and final round of the elections, but also in a speech in the town of Pau in southern France on April 12th. “This reform [of the labour laws], I will lead it as of the summer, because we must move quickly, to have a more efficient economy, to relaunch our businesses, and to create a real economic reform, both effective and just, because it will create jobs,” he said then. That gave the impression that the reform of the labour laws would give concrete results in terms of growth of jobs.
But now, already, this reform, what economy minister Bruno Le Maire called “the mother of all reforms” at a congress of the Medef on August 30th, is apparently not enough in itself.
Significantly, the new French president refuses to accept any judgment of its results in numbers. Speaking in the Austrian city of Salzburg on August 23rd, during a three-day tour of central and eastern Europe, Macron said the aim of the reform was not to “reduce the unemployment rate by a few points” but, in substance, to bring about a new state of mind. He repeated much the same thing in his interview with Le Point published on August 31st, when he said, “the aim of the action is not to reform the labour code or to reduce public deficits; they are the means, instruments, to arrive at other things – the liberation of energies”. But the president did not explain how it would be possible to know when these “energies” are liberated by the reforms.
The rhetoric accompanying the reforms centres on the promise of something that is new, which is in itself the supposed guarantee of its effectiveness. In the live interview with Mediapart on May 5th, Macron argued that the difficulties of the French labour market were due to the absence until then of reforms. Speaking in the Romanian capital Bucharest on August 25th, he declared that “the French detest reforms”. While all this lends an impression of innovation to the reforms, it is to forget that France, like other developed countries, has seen a catalogue of continuous reforms since the 1980s. But Macron’s reforms are presented as a novelty which, breaking with the existing practices, is proof of its effectiveness.
The principal problem here is that this promise is based on nothing concrete. The effectiveness of labour law reforms has never been demonstrated, and there are even doubts that, in certain cases, such reforms damage labour productivity and increase inequalities. What is clear is that while all the developed economies are deregulating their labour markets, productivity is falling and inequalities are rising.
To ‘save’ the reforms, the government’s only solution is to separate them from their initial function, namely a fall in unemployment which in reality they are incapable of achieving. Once passed, the supposed miracle of the reforms disappears and their precise results are impossible to measure, and voluntarily minimized. Thus the priority becomes the necessity for yet even more important reforms, more ‘novelties’.
The labour law reforms introduced by the previous socialist government, dubbed the El Khomri law (after the name of the then labour minister Myriam El Khomri), whose supporters argued last year was essential for the French economy, is now no more than a sub-event that barely deserves mention. The Medef, immediately after the El Khomri law was enacted, picked up with its old refrain about the unfavourable rigidity of the labour market, while Emmanuel Macron, who as François Hollande’s economy minister took part in the making of it, led his election campaign as if it had been simply an anecdotal reform. Amnesia is the best ally of the rhetoric of reform, while the opposition becomes disarmed by the move to introduce yet another.
The rhetoric maintains a sort of permanent need for something new and which minimises past reforms while never placing in question the supposed virtues of deregulation. That is exactly what we are seeing now. By giving this new law the status of a “first stage”, the government protects itself from its eventual failure, and places the focus on yet more ‘necessary’ deregulation – which is what the Medef has set its eyes upon with its comments on the need “to go further”.
This strategy of protecting reforms by diluting the capacity to clearly establish their results employs the habitual rhetoric of liberal economic reforms, as was used during the European debt crisis; when the negative effects of the reforms championed by the Eurogroup became clear, these (when they were not simply dismissed as having no relevance) were used to justify the need for yet more reforms.
Whatever, the reform camp, it seems, is always right. When unemployment falls it is because of reforms, and when the number of jobless rises and endures it is because of a lack of reforms.
But such arguments cause catastrophes like that now seen in Greece, and they lie behind the very poor management of the 2010-2013 European crisis. The claimed successes are in every case debatable, as with the uncertain results of the Jobs Act in Italy. Aidan Regan, a lecturer on European economy politics with University College Dublin, has written how austerity policies and structural reforms in fact had little influence on Ireland’s strong recovery from the European financial crisis, during which it was one of the hardest-hit countries. In Spain, the benefits of liberal reforms introduced during the crisis are even less obvious given that mass unemployment continues and that economic growth has been at the cost of a strong fall in much of the population’s living conditions.
It is therefore understandable that the French government and employers’ federation are already adopting a line that offers them a safe haven in case of a negative result of the labour law reforms. Especially given that Macron has made the perilous choice of joining the reforms with budgetary belt-tightening aimed at financing a lowering of taxes centred on the wealthiest section of the population. As the International Monetary Fund itself underlined, this “expansionary austerity” is as economically unconvincing as the reforms of the labour market. If growth slows, the situation will become preoccupying. In an agitated political context, the credibility of the reform rhetoric is at stake, and it is that which the government and the Medef are now trying to save.
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- The French version of this article can be found here.
English version by Graham Tearse