by John Redmond
Mon May 30th, 2016 at 10:06:47 AM EST
For much of the past month, large portions of the French economy have been hit by strike action, effecting in particular the transport and energy sectors, in response to the Valls government's proposal to overhaul French employment law. Public transport has been hit by rolling strikes both nationally, via work stoppages at the national rail company SNCF, as well as locally via commuter rail grids such as Paris' RATP. Similarly, petrol refineries have also been hit, with up to six (out of eight nationally) refineries either offline or at below output capacity at various points last week, with between a third and 40% of petrol stations running out of petrol to sell, causing long lines at the pump and a fair bit of consumer stress as regards future supplies.
Even France's vast nuclear industry, which provided 75% of the country's electricity needs, has been hit by strikes, though production is not (yet) reported to be impacted. And, similarly, maritime shipping has also been struck, with the ports of Le Havre, Marseille, Dunkerque, Saint Nazaire, Bordeaux and Rouen all either brought to a standstill or severely hampered from an operational standpoint. The strike actions have been accompanied by regular, numerous street protests, with heavy student participation, with a good number of street actions turning violent. Indeed, even a young American has been recently arrested for participating in a particularly violent act on the margins of a recent street protest, while the Police unions have equally taken to the streets to protest both being undermanned as well as the nature of the instructions they have received from the Ministry of the Interior as regards management of the protests they are working.
The strikes show no signs of letting up, with an outlook for the month of June, during which the European Cup football tournament is scheduled to be played in France, being at best similar to the month of May.
Frontpaged - Frank Schnittger
As most casual observers know, France is a country which is no stranger to industrial action. While the street protests and strikes of May 1968 remain in popular memory as a defining moment in recent French history, quite a number of subsequent strikes and protests have ensued since that famous month, when workers and students combined to bring France to a standstill for a month, ultimately driving Charles de Gaulle from the Elysées Palace, designated residence of French Heads of State since the reign of Louis-Napoléon III.
The French press points to three recent periods of "social movements" in comparison to the present: the Fillon government's modifications, in 2010, to France's public retirement system, increasing the age of retirement by two years, the Villepin government's aborted proposal to limit work-law protections for youths in 2006, and finally, the Juppé government's partially aborted attempts to align public sector working conditions with those of private sector employees in 1995.
In the first case, the comparison can be seen to be limited to the tenuous situation at petrol fueling stations, as in 2010, the refineries were equally struck, though ultimately the proposed law went through. In 2010, the strike action was arguably not as well accompanied, either in numbers or in duration, by street protests and accompanying industrial action.
In the second case, the comparison is more clear, given both the relatively sustained participation in both protest movements of students, and the nature of the parliamentary procedure employed by Villepin in 2006 to legislate the proposal (the so-called "49-3" procedure, whereby a government can bypass a floor vote, more on this later).
Finally, the protests of 1995 are largely considered (for now) to have been of a greater magnitude than the present actions, the point of comparison being usually to discuss the economic impact of the present troubles. The massive public sector protests against the Juppé programme in 1995 are by and large estimated to have lowered economic output in France by between 0.3% and 0.4% of GDP in Q4 of that year. In contrast, current estimates would put the economic impact to date on the French economy at perhaps 0.1%, though this estimate is to be treated with caution given the current industrial action is not yet complete and given the source (Le Monde) is generally sympathetic to the Holland administration and the Valls government who are behind the present measures, and therefore perhaps prone to soft-pedal regarding the impact of their actions.
Predictably, the Government-run press have, like Le Monde, downplayed negative impacts to date on the economy, all the while insisting, as the President does here, on the risks that further action might have on the performance of the French economy which, posted a respectable 0.6% (quarter over quarter) level of GDP growth, seemingly confirming recent good news on the employment front, with two consecutive months of drops in the level of workers on the dole. Could President Hollande and the Parti Socialiste finally being turning around its electoral prospects in view of next year's Presidential and Parlaimentary elections?
How did we get here?
General de Gaulle once famously remarked on the impossibility of governing a country with so many hundreds of cheese varieties, as he himself came to learn in 1968. France is no stranger to civil unrest, the history of the Republic itself borne of such upheaval. While today's disruptions are rather like small blips on the screen of the "Republic" in the grand scheme of things, it does take a bit of doing in order to get the head of the General Confederation of Labour (CGT), Philippe Martinez, to edge the country towards general strikes not seen since 1995. What was the casus belli ? The proximate cause is the proposal to amend French labor law, and most especially by the so-called "inversion of norms" with regards to inter-sectoral negotiation of labor contracts, referred to in the local press and by Valls himself as Article II. For all of the talk of limiting workers' rights to redress in the case of wrongful dismissal, extending work hours, and giving employers flexibility in the payment of overtime, all of which have been part of the Valls government's proposals, the crux of the conflict pitting France's most powerful union against its putatively left-wing government is this "inversion of norms". What is this "inversion," and why is it important?
One misunderstood aspect in the anglo-saxon press of France's workforce is just how low France's level of unionisation is.
The fact is, at 11% of employees, unionization levels in France are under half the EU average of 23%, and those of the other key economies Germany (18%), the UK (26%), Italy (21%) and Spain (17%), despite the anglo-saxon conventional wisdom that French governments dance to the Union's piper. Notably, though, French employees can still vote in their company's union elections, and have a participation rate in those elections of roughly 50%, significantly higher than in, say, EU elections, or in various by- and local elections as well.
The reason why French union participation rates can be so low is precisely because of such labour protections as the "inversion des norms," a key part of the French labor code which requires that all worker contracts within a given sector obey a certain set of minima. These sector-wide minima are set by contract negotiations take place between representatives of the unions and of the employers, with given employee's representation assumed by union leadership irrespective of union membership, in much the same way management representation is assumed by employer representatives irrespective of management shareholding. The resulting sector-wide contract is known as a "Convention Collective," or Collective Contract. Today, any company-specific contract cannot make an employee worse off than they would be under the sector-wide contract already in place. This is referred to as the hierarchy of norms, with the sector norms establish by industry-wide negotiation being considered superior, hierarchically, to those of the individual employers within the industry.
What the Valls government intends, via Article II of the current proposal, is to abolish this hierarchy and permit individual employers within an economic sector to negotiate company-wide contracts which are beneath the minima established by the sector-wide contract. This both undermines the importance of sector-wide negotiations, source of current union power, as well as, say detractors, promoting a "race to the bottom" in labour rights among companies within a sector.
The critical point here is that Article II can be seen as an attack on the negotiating position of unions in general in France, which fundamentally explains the fierce opposition we are seeing to it on the part of many of the unions. That the CGT is spearheading the opposition can also be seen as an attempt to position itself politically, with respect to union representation: once the overwhelming leader in the French labour movement, the CGT has been recently hobbled by accusations of corruption on the part of Martinez' predecessor, Thierry Le Paon, and is in need of a credible uniting theme for ongoing union representation elections. Similarly, the CFDT union (positioned centre-left rather like the PS), poised to assume the leadership position should CGT falter, is equally staking a position, in the CFDT's case one of being open to government proposals, including Article II.
49-3, or Democracy in Action
Further inflaming an already contentious debate, the Valls government, riven by internal divisions, and weakened by the loss of nearly every by-election held since 2012, could not count on passing its new Labour Law (or, "Loi el Khomri" named after the Labour Minister) via a simple floor vote. The reason is simple, the centre-right opposition as well as the Left Front were opposed, as was a sizable minority of Parti Socialiste parlaimentarians (the so-called "frondeurs").
Instead of risking an embarrassing defeat in the National Assembly, the Valls government instead invoked an article of France's constitution, article 49 clause 3 (or 49-3) whereby a government can push through a law via decree, subject to a confidence vote ("motion de censure"). Essentially, a weak government can push through laws in France without voting them; instead, it dares the opposition, including those within its own party, to provoke the fall of the government in the event of opposition to the given law. This is referred to as "engaging the responsibility of the government," or in other words, inciting those in opposition to assume ultimate responsibility for the laws failure by provoking the failure of the government itself.
As might be expected, in the face of overwhelming unpopularity of the Part Socialiste, the present government and President Hollande, the "frondeur" section of the Parti Socialiste, fearful for their jobs for the next twelve months, abstained rather than voting the centre-right motion of no confidence, thereby permitting the changes in the new Labour Law to be adopted, much as they had done not a year ago during the adoption of an Economic "Reform" bill, the "loi Macron".
Article 49-3 has subsequently been derided as anti-democratic, as an abuse of presidential right, and as clearly going against popular sentiment, which is currently running at roughly 70% against the law in public polling. All of which are true in varying measures, though the fact is the article has been in place, and often used, since the institution by General de Gaulle (and voted by referendum) of the 5th Republic itself. Indeed, Socialist Prime Minister Michel Rocard used it assiduously, though Nicolas Sarkozy never had to. Nonetheless, the fact that the present government, weak and unpopular, had to resort to it at this time has most certainly inflamed sentiment against the law.
Where are we heading?
Life has been undeniably uncomfortable for the average French consumer and taxi driver waiting in line for petrol. The same can be said for commuters arriving late to work in commuter train cars packed even more than usual by the cancellation of struck trains. But so far, the economic impact has been reported to be minimal. Denis Ferrand of the economic consultancy Coe-Rexecode, and widely cited, estimates the impact to date at 0.1 points of GDP. And while the phrase so far may give some understandable pause, evidence to date shows some level of give on both sides - heavy hitters in the PS, notably Finance Minister Michel Sapin have indicated some flexibility regarding Article II, while there have been some reports of softening support for strike action among the rank-and-file.
Additionally, in previous cases of significant work stoppage (both in 1968 and in 1995), the economic impact of the strike was more than made up for in subsequent quarters; for instance, in Q2 1968, when France contracted by 5%, the following quarter saw a rebound to 7.5% economic growth. So, the short term economic impact of the current events do not give cause for worry.
On the other hand, the long term impact of limiting labour rights, in an environment of stagnant demand and consumer purchasing power, may be somewhat less benign, with continued softness in consumer demand, currently a source of some optimism in otherwise grey French economic skies, likely to continue.
As for the political fall-out, the recourse to article 49-3 to pass an unpopular law simply renders the current government even more unpopular, as evidenced by continuing polling, and paving the way for a centre-right victory in 2017 elections and the prospect of further legislation. Indeed, France's PS has learned nothing from Spain's PSOE, which also passed unpopular, centre-right tinted legislation at the start of the Eurozone economic crisis, in 2010 and was summarily thrown out by voters the following year. A weakened government will remain weak - and it will be in no position to make a case for re-election in a year's time. Meanwhile, consumer demand cannot help but be undermined in the short term, even as it seems to be trending in the right direction today, a potential downturn which can only further cloud the PS electoral prospects next Spring.