Tires and police cars in flames, bridges and fuel depots blockaded, rail and airline staff on strike, ministers being attacked on the street: France is in chaos, locked in a fundamental struggle over its economic future just as it’s gearing up to host the month-long European soccer championship, Euro 2016, from Friday.
Past French governments ended up backing down when confronted with mass demonstrations against reforms. So has President Francois Hollande in the past. But this time he looks determined to push through his plan to reform the labor market and reduce the high unemployment dogging the euro zone’s second-largest economy.
In an exclusive interview with Handelsblatt, the French labor minister, Myriam El Khomri, said her government would stick to the planned labor law and was committed to instilling a “culture of compromise” in France of the kind that she had witnessed in Germany during the refugee crisis.
Her government plans to make hiring and firing easier for firms by allowing company-level labor agreements that would take precedence over industry-wide deals. The reforms are aimed at liberalizing France’s tightly regulated labor market, including extending working hours in a country that still has a 35-hour working week.
In doing so, Mr. Hollande has thrown down the gauntlet to trade unions and enraged the left wing of his Socialist Party.
“This system is running out of steam. And the employees are suffering most from it.”
“I am not willing to bend and invalidate the text by eliminating priority for company-level agreements,” said Ms. El Khomri. Even if the strikes that have disrupted the country for weeks continued, “we will not back down,” she added.
France is still in a state of emergency after 130 people were killed in terrorist attacks across Paris in November. The French, United States and other governments have warned that militants may target the soccer tournament.
These fears were confirmed when Ukraine’s intelligence service said on Monday a French citizen detained last month on the border with Poland had been planning attacks in France during the tournament. He had rocket launchers and assault rifles in his vehicle.
Floods across swathes of the French countryside have added to the sense of chaos.
Ms. El Khomri said the dispute ran deeper than a change in labor law. Asked whether the unrest showed that France was incapable of reform, she said: “No! You see many innovations across the country, we’re European champions in company start-ups. Our difficulty is rediscovering a common spirit, to pull in the same direction.”
She had praise for Germany’s “focus on the common good” which she had seen during the refugee crisis when trade unions, business associations and the government worked together. “That is this culture of compromise that we lack and that we’re trying to promote,” she said.
“We must get away from this role-playing that you don’t have in Germany. There are business people in France who want to negotiate but only if trade unions don’t take part, and there are trade unions who want to see everything dictated by the law, without giving companies room for maneuver. And there are government departments that would like to decide what, when and how the management and trade unions negotiate. This system is running out of steam. And the employees are suffering most from it.”
Employers in France were shifting towards temporary contracts because they lacked other options to respond to changes in the labor market, she said. “The world of labor is changing, that requires being quicker, reacting and taking decisions as closely as possible to the conditions on the ground.”
She said employment in Germany rose faster than in France following the 2008 financial crisis. “But we have a lower poverty rate because the welfare cushion is very pronounced.”
“I know we have to get better at reintegrating unemployed people and for that we above all need better continuing education. And we have a problem with job training, which in France is seen as a form of personal failure while you [in Germany] value it highly,” she said, comparing France with Germany.
Asked about boosting incentives to find jobs, as Germany did with its labor reforms in 2003 and 2004 by cutting long-term jobs benefits and requiring claimants to accept the jobs they were offered, she said:
“Of course one must do everything to motivate people to return to employment. But at the same time people must be protected. In France, unlike in Germany, poverty hasn’t increased and inequality has even lessened slightly.”
She added: “The aim of the law that I support is clear: We want to get from a culture of conflict to a culture of compromise and to promote social dialogue at the corporate level. We agreed a compromise with the trade unions that represent the majority of employees. But because we initially explained too little, tensions between trade unions intensified,” she said.
Europe is witnessing France’s attempt to reform itself after decades of stagnation.
“Our image abroad is contradictory,” said one French investment banker who preferred not to be named. “On the one hand investors praise our excellent infrastructure, the good education system and the central location, but then they see the torn shirt of the personnel manager of Air France and they’re shocked.”
He was referring to an incident last October when the airline’s human resources chief, Xavier Broseta, was chased by staff after a works council meeting about job cuts. His shirt was ripped to pieces as he struggled through a crowd and he had to climb a fence to escape.
Previous French governments have bowed to the power of the street when it came to imposing controversial reforms.
Reform-oriented trade unions such as the French Democratic Confederation of Labour CFDT back Mr. Hollande’s law but the more radical ones such as the General Confederation of Labour (CGT), Workers’ Force and Solidaires Unitaires Démocratiques are categorically opposed to it and are demanding that the law be withdrawn or fundamentally changed. They fear a loss of their power if company-level labor deals are allowed to override contracts arrived at by industry-wide bargaining.
But Mr. Hollande, who has backed down a number of times in the past four years, seems determined to stand his ground this time.
“The law will not be withdrawn and will not be changed in its core, which is the opening of agreements in companies,” the president said last week.
That’s forced the radical trade unionists into a decision: give up and suffer a major defeat or seek to bring Mr. Hollande to his knees. This time, they may lose: the number of people taking part in strikes and demonstrations is declining.
If CGT and its allies fail, the hard left of the ruling Socialist party will also have failed because it too is opposed to the reform. Mr. Hollande, mocked by his opponents as a “jelly” and a “pedal boat captain,” would emerge as a reformer who succeeded where his predecessors failed: forcing the radical left to its knees and opening France up to a culture of compromise.
Thomas Hanke is Handelsblatt’s Paris correspondent. To contact him: email@example.com