Labor Protests Labor Reform

With strikes and protests sweeping across France, the nation’s government once again finds itself in a crisis situation. President Francois Hollande’s administration is attempting to pass labor reforms in an effort to curb the country’s persistent unemployment, which has been hovering around 10% for several years. France’s current labor laws – especially its “35 hour work week” – are often seen internationally as overly generous to French workers. Other European countries, such as the United Kingdom and Germany, which previously had legislation similar to France’s in place, have been forced to institute some level of reform in the hazardous economic climate of the past decade.

The proposed French reforms primarily seek to address the difficulty employers face in dealing with their employees. Should the reforms be implemented, the famed 35 hour week would become a national average rather than a hard-and-fast rule. Firms would be able to negotiate lower pay with workers, less generous vacation and special leave terms, and lay off workers more easily. Proponents of the law believe these changes will spur economic growth. The law’s detractors, however, fear that it is a defeat for workers’ rights and may not have the intended effects. In the process of agreeing upon a bill, the proposed legislation has changed so much – including additions of training guarantees and asserting an employee’s right to ignore emails after hours – that many of the bill’s original supporters have joined in opposition with those on the left, decrying the current bill as toothless.

After months of searching for a consensus, Mr Hollande employed a seldom-seen executive power to drive the reforms through France’s National Assembly and straight to the Senate. This has incited widespread protest, some of which has been violent. Across the country, hundreds have been arrested over the past several weeks in various clashes with police. Many of the protestors are students and young people, the demographic that the reforms most seek to empower. The evident disagreement between protesters and the government about the reform’s potential effects may run so deep as to make deliberation on the issue impossible.

National Assembly members, both within Hollande’s own Socialist Party (where a rift has been growing for some time) and on the right, are themselves enraged at being bypassed by the administration. Indeed, the conservative portion of the National Assembly attempted to force Mr Hollande’s resignation, but failed to garner the requisite support from Socialists. 

While France’s reforms are a significant change for one of the most persistently liberal countries in Europe, they come in the context of a much greater trend across the EU. Following the 2008 financial crash, many European countries have faced double-digit unemployment rates and shrinking GDPs, and have implemented much needed reforms in their labor and financial markets in response.

Italy is often mentioned as a potential leader in economic reforms. The country has long been in the throes of a catastrophic recession that brought on negative GDP growth for three years in a row. In response, Italian Prime Minister Matteo Renzi implemented the Jobs Act, a sweeping reform that eliminated burdensome restrictions on firing employees and raised benefits to compensate newly unemployed workers. Many economists hope that, by lowering the costs of laying off workers, Italian firms will be less hesitant to create new jobs, simultaneously expanding the economy and reducing the towering unemployment rate. These reforms have already managed to reverse Italy’s shrinking GDP, although economic growth remains at a relatively anemic 0.8%. Leftist movements are determined to undo all economic reforms, and have successfully protected the jobs and accompanying benefits of 3.5 million public sector union members. Courageous politicians like Mr. Renzi risk much when they fight for economic reform, and the hopeful situation in Italy comes with the risk that a single election could destroy the progress they have made.

Denmark and Sweden, two Scandinavian countries widely known for their generous social safety nets and effective labor markets, have also felt the need for reform. Over the past few years, these countries have shortened the period their people can collect unemployment benefits and increased training and education. Denmark has even raised its retirement age, to generally positive results. Germany has implemented similar cuts, which have produced a large reduction in the unemployment rate and increased labor force participation, though some critics argue that this effect is driven largely by people taking bad jobs out of desperation. Spain recently passed some limited reforms to its stifling collective bargaining rules, which have appeared to positively impact the country’s staggering unemployment rate of 24.5%. The least successful examples of reform are likely Greece and Portugal, which have pursued limited labor reforms that have thus far failed to produce a satisfactory effect, although whether this due to such reforms being misguided or not extensive enough is a subject of contentious debate within these countries.

Labor reforms are imperfect, and require bold political action and short-term sacrifice for entrenched workers in the economies in which they take hold. Perhaps, then, Europe’s still-precarious financial situation is the strongest argument in favor of such reforms. The European Union never saw a real end to the Great Recession, and without bold change, may fall into an even deeper crisis. Europe is desperately in need of genuine political courage, that rarest of assets. Hopefully it will find enough to forge a less-bleak future for its people.

Liam Conway-Pearson and Jose Trejos contributed