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France v Netherlands - FIFA 2018 World Cup Qualifier
French president Emmanuel Macron reacts during the FIFA 2018 World Cup Qualifier between France and Netherlands. Xavier Laine - Getty Images

Emmanuel Macron Is Ready to Push Through a 'Revolution' in How France Works

Sep 07, 2017

It is as French as the croissant: The vast labyrinth of labor laws that for decades have ensured watertight job protections for people, no matter how poorly they perform, and handsome packages once they leave.

But as the French get back to work this week after their long summer vacations (a minimum five weeks' vacation is also enshrined in law), that labyrinth is crumbling, with the biggest overhaul in workplace rules in generations. The reforms are so far-reaching that President Emmanuel Macron has dubbed them a "Copernican revolution," after the 16th-century discovery that the earth revolves around the sun. Macron, just four months in office, told the French magazine Le Point last week that he is determined to "liberate… a country corseted by rules."

The changes will not come without a fight. Just a year ago, while Macron was Economy Minister, thousands went on strike and fought street battles with police, in protest at Macron's attempts to rewrite the labor laws. Exasperated, Macron quit the government and ran for president in May. He won handily, then crushed the ruling Socialists in parliamentary elections with his brand-new République En Marche political party. Now the 39-year-old leader is determined to power through his plan, even as his opinion rating has dropped over 20 points since his election.

Yet the fights are far from over. The far-left CGT union has asked its members to strike next Tuesday, Sept. 12. And the far-left France Unbowed political party says it will march in protest later this month. Macron's plan, however, seems unstoppable. He has spent months in meetings with unions and business leaders, outlining his plans. And with his party's commanding majority in parliament, Macron can in any case ram through his decisions. This fact is only now sinking in for many French, who have grown accustomed to politicians vowing to bring change, only to see them back down in the end.

These new labor laws might seem modest to most Americans, but in France they represent dramatic change. The giant severance packages awarded to laid-off employees by state-run labor courts will be capped, and dozens of rules trimmed for companies that have 50 or more employees, theoretically making it easier for French businesses to hire new staff. The regulatory body that governs independent contractors will be shuttered, vastly simplifying the work rules for freelancers.

But most far-reaching of all is a move that companies and economists have pushed for for years, with no success: Allowing companies to negotiate directly with their employees, rather than adhering strictly to France's byzantine Labor Code—a 3,500-page tome that determines almost every detail of how people are hired and fired, and how they work.

For years, economists have long argued that the Labor Code—a brick-sized red book published by the government each year—has paralyzed France's job market. Many employers are simply too scared to hire new staff, for fear of violating one of the thousands of government rules within the bureaucratic bible.

The consequence, say economists, is chronic unemployment rates around 10%—and nearly 25% for youth—far above almost every advanced country in the world. "It is ridiculous to have exactly the same, very deep, labor code for all employers in France," says Gilbert Cette, an economist at the University of Aix-Marseille, who co-authored a major report in 2015 outlining how French labor laws needed to change. "If you hire someone a few hours a week to clean your house, you have to abide by the Labor Code."

Indeed, the Labor Code has ballooned far beyond its original intention when it was written in 1906, after a factory fire killed dozens of people. In the 11 decades since, lawmakers have been deeply reluctant to alienate unions by scrapping regulations, opting instead to expand them. (The five-week minimum vacation leave, for example, dates back to the 1930s.) "We have been more and more unable to reform for 30 years," says Stéphane Sirot, a labor historian. "We have rules and laws superimposed on top of one another, and we have never retreated from anything, ever."

Now, after years of struggling to find job opportunities, many French appear open to change. The CGT, which led last year's street protests, was overtaken this year as France's largest trade union by a far more moderate group, the French Democratic Federation of Labor, or CFDT , which has refused to join next week's general strike.

And yet, although Macron's presidency has dramatically shaken up France, it is still not clear that the changes will bring the "revolution" he is seeking – at least not in France's relationship to the state.

According to some economists, most French still expect their government to solve the country's problems, after decades of heavy state interference in their lives—a culture that they say has helped to stifle entrepreneurship. Nearly 58% of France's GDP comes from public spending—the second-highest of any industrialized country—compared with about 37% in the U.S., and about 40% in Germany. That is unlikely to change dramatically, since it will take years for the labor reforms to filter through the economy, and France continues to have generous public health care and pension benefits.

Even once hiring and firing becomes a far simpler process, the notion that the government will continue to look after its citizens is likely remain deeply engrained. And w hen a crisis hits, the French expect their government to step in, as Macron's has proven itself happy to do. In July, for example, his government nationalized the shipbuilding company STX in order to prevent an Italian competitor from buying it outright. "Macron is only one man, but it is a whole system that needs to change," says Karel Lannoo, CEO of the Center for European Policy Studies in Brussels. "It has to come to people's minds that the state is not there to take care of everything, from A to Z."

That could take years, or perhaps decades, to happen. And until then, some rules are sure to remain—including France's cherished long vacations.

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