France's Macron unveils flagship labour reform with reputation on the line

French President Emmanuel Macron waits for guests at the Elysee Palace in Paris, France on Aug 31, 2017.
French President Emmanuel Macron waits for guests at the Elysee Palace in Paris, France on Aug 31, 2017. PHOTO: REUTERS

PARIS (AFP) - French President Emmanuel Macron's government unveiled a major overhaul of the labour code on Thursday (Aug 31), a signature reform that will test his ability to force through changes and face down protests.

The 39-year-old centrist sees overhauling France's highly protective, rigid labour regulations as key to creating jobs.

The measures are aimed in particular at helping small and medium-sized business by curbing the power of unions, limiting unfair dismissal awards and allowing bosses to negotiate more working terms and conditions directly with their employees.

Prime Minister Edouard Philippe, unveiling the changes at a press conference, called them "ambitious, balanced and fair" and said they would help France "make up for lost years" of high unemployment.

"There are differences. We accept them," Philippe said, referring to opposition and criticism from trade unions.

The moderate CFDT trade union said it was "disappointed" by the proposed changes overall, while the hard-left Force Ouvriere (FO) union also said it disagreed with many of the measures.

But crucially from Macron's perspective, neither of them said they would recommend their members join planned street protests next month by the Communist-backed CGT, France's biggest union.

The reform is a pivotal part of Macron's domestic agenda.

He campaigned on a promise to encourage entrepreneurship in France, where the unemployment rate of 9.5 percent is almost double that of its large European rivals.

In an interview published on the eve of the announcement, Macron said the overhaul had to be "ambitious and efficient enough" to spur job creation.

"We are the only major economy in the European Union that has not defeated mass unemployment for more than three decades," he told Le Point magazine.

He warned last week that the French "hated reforms" and tried to avoid them as long as possible - but his European partners, particularly in Germany, are watching closely to see if he can succeed in implementing them.

The changes will be implemented via executive order, allowing Macron to avoid a lengthy parliamentary debate.

The overhaul will be adopted by the government next month and must then be ratified by parliament, where the president's Republic on the Move party has a large majority.

First major protests

The move is set to bring the first demonstrations against his government, with the CGT union, and the new political party France Unbowed calling for protests on September 12 and 23.

Philippe Martinez, the head of the CGT, on Thursday dismissed the reform as "old recipes which will not change the lot of the people." The announcement comes at a time when Macron's approval ratings are falling sharply, signalling the end of the honeymoon he enjoyed with the public following his election.

Recent polls showed that only around 40 percent of French voters are satisfied with his performance in office, with the fall attributed by analysts to a mix of communication problems and political missteps.

The influential head of the employers' confederation Medef, Pierre Gattaz, had urged Macron to be bold with the labour market changes, which were drawn up in secrecy.

"This labour law will be bellwether of Emmanuel Macron's presidency and his desire to really reform," Gattaz said Tuesday, echoing the views of many economists.

Leftwing opponents

Radical leftist Jean-Luc Melenchon, who finished fourth in this year's presidential election and heads the France Unbowed party, has called for a mass march against what he describes as "social welfare coup d'etat".

The labour overhauls are likely to provide fresh ammunition for opponents of Macron who accuse the former investment banker of pandering to business owners with his programme, which also includes cuts to taxes and public spending.

"Macron, president of the rich?" asked a front-page headline in the left-leaning Liberation newspaper this week, pointing to research showing that his proposed tax cuts would mainly benefit the wealthy.

At present, French labour law is enshrined in the national labour code, a red book which runs to around 3,000 pages covering everything from health and safety to contract law and pensions.

Macron's aim is to vastly simplify the code, enshrining basic employment protections in law but leaving companies, trade unions and employees to negotiate much of the rest - instead of requiring bosses to abide by terms negotiated by unions for the whole industry.