French Elections Round-Up Part Two: Employment and Social Policy
Looking at the core of voters' interest

José Martín @ unsplash.com José Martín @ unsplash.com

 

Socio-economic issues will be of central concern when the French elect a new president on April 23rd and May 7th. In a mini-series, the GED project will present to you not only the most pressing issues at stake, but also the corresponding solutions each of the five main candidates proposes. In this second take, we will take a closer look at a topic at the core of voter’s interest in these elections: France’s employment and social policy. For an in-depth analysis, also take a look at our recently published Focus Paper

 

Missed part one or want to skip ahead? You can click here or here to go directly to part one or three of this mini-series.

 

With overall unemployment rates stagnating at 10 percent and youth employment remaining high at almost 25 percent, it is no surprise that according to the recent Eurobarometer, 49 percent of the French people name unemployment as their biggest concern at national level, followed by terrorism in 2nd (31%) and immigration in 3rd place (19%). Accordingly, issues related to employment and social policy as well as inequality are at the centre of concern during this year’s presidential elections. Let’s take a look at where France currently stands and what each of the candidates proposes.

 

Employment Policy

 

Employment is generally a hotly debated issue in France and therefore also a core issue in the presidential elections. With the country’s unemployment rate on the rise since the financial crisis hit Europe in 2008, a central promise of François Hollande’s 2012 campaign was to boost job opportunities. However, unemployment rates remained high, which put Mr. Hollande under immense pressure to deliver upon his campaign promises. Since 2012, unemployment in France has been stagnating at around or even slightly above 10 percent. According to the OECD, 44 percent of the unemployed have been jobless for more than 12 months, which suggests high structural unemployment.

 

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Another issue is that France’s share of temporary employment is relatively high compared to other OECD members. This points out a critical duality in the French labour market: Even though about 85 percent of employment contracts are of a permanent nature (French: contrat à durée indéterminée, CDI), about 87 percent of new hiring is based on temporary contracts (French: contrat à durée déterminée, CDD), sometimes lasting as short as only a month. Whereas one side of the French labor market is hence characterised by highly regulated and protected jobs, another part is marked by insecurity, precarity and limited labour protection.

 

Young people, immigrants and the low-skilled are the most vulnerable groups on the French labour market. The high youth unemployment rate of 24.6 percent represents a particular challenge. Both, overall unemployment as well as youth unemployment in France, are the 6th highest in the whole OECD. The OECD therefore emphasises the necessity of undertaking structural reforms to put the country back on track.

 

Several labour market reforms have been successfully introduced by the Hollande administration. However, the Sustainable Governance Indicators of the Bertelsmann Stiftung underline that, even though French economic and labour market reforms are moving in the right direction, they do so without consistency. Concluded in 2013, an agreement with social partners aimed at introducing more flexibility into the labour market and improving health services. The Loi Macron and the Loi Rebsamen, both introduced in 2015, aimed at lowering bureaucratic and procedural barriers. The Loi El Khomri was put into law in summer 2016 after facing extensive protests and controversial debates. Whereas the original draft aimed at loosening up the 35-hour week, the final law does not touch upon this issue, but aims at introducing more flexibility into employment relations in general. The original bill was adjusted several times, and faced strong opposition by trade unions and employees, students but also by members of the governing party, the Parti socialiste. Mass rallies culminated in the “nuit debout”, a regular assembly of protesters in Paris.

 

Whereas the left criticises the reforms as putting workers’ rights at risk, conservatives think the changes still do not go far enough. The divisive potential of such reforms is underlined by an Ipsos survey: Whereas 51 percent of French people think that more flexibility should be introduced into the labour market, 43 percent prefer to strengthen employment protection. Whereas voices backing further flexibility are especially strong within the conservatives’ camp (80%) and among older French people (63%), far-left voters (84%) as well as the under-35-years-old (53%) are favourable towards stronger protection systems. These dividing lines can also be seen starkly in the different election manifestos of the presidential candidates. Yet, generally the French seem to think that something must change: Only 6 percent state that nothing should change in the current labour market situation.

 

Social Policy

 

Public awareness of inequality levels in France is rising: The Ipsos survey shows that a large majority (85%) thinks that inequality has risen during the last few years, more than half (54%) even think it has risen sharply. Only 7 percent say inequality has decreased. This trend is present throughout all political camps, but particularly strong among far-left voters (93%). In particular, the gap between rich and poor is perceived by 82 percent of the French to have increased. As for intergenerational inequality, the authors of the Social Justice Index (SJI) of the Bertelsmann Stiftung note that several indicators reveal a gap between young and old in France. The SJI finds that French poverty prevention works generally well, but is better for elderly people than for younger ones. This applies similarly to the risk of material deprivation and income poverty. France scores slightly above average on intergenerational justice and slightly below the EU average on matters of child and youth opportunity.

 

As regards wages, income inequality in France is slightly below the OECD average. After a period of high wage growth between 2008 and 2010 as well as a year of wage moderation in 2011, wages are growing again in France at the average pace of the OECD area. French labour productivity is basically equal to German labour productivity, so there is no need for competitive wage adjustments (“internal devaluation”) as in Spain or Greece. Disposable income stagnated during the financial crisis, so France has circumvented basic income losses such as witnessed in Greece, Italy, Portugal or Spain.

 

French relative income poverty rates remain below the OECD average. One potential factor to explain this relatively stable performance is the well-funded social protection system in France: At 32 percent of French GDP, the total of social expenditures is the highest within the OECD. By international and European standards, the French welfare state is generous and provides substantial benefits. Generous support is provided for child care and parental-leave benefits; in general, women’s labour-force participation is high. Even though France performs generally well on quality of education, it has one of the largest deficits concerning the link between social background and learning success. Equal access to education is an issue, in particular for working-class and immigrant students. France has a high quality health care system, which is accessible to all residents but generates regular deficits. The overall sustainability of the French welfare state has been improved by pension reforms.

 

Solutions Proposed by the Candidates

 

Jean-Luc Mélenchon

 

Mélenchon, the most left-leaning candidate to this year’s elections, intends to rescind the reforms implemented under Hollande’s presidency, especially the Loi El Khomri which he views as an “open door to internal dumping (…) and the regression of all workers’ rights”. But the candidate of La France insoumise (unsubmissive France) does not contend himself with retracting the reforms of a previous government – he has his own ambitious agenda: To cut unemployment, he calls for a massive public investment plan worth €100 billion and to reduce working time to 32 hours per week.

 

He also intends to raise salaries for workers and to introduce a salary cap of €400,000. For salaries above this threshold, he proposes to introduce a 100 percent tax rate. In order to reduce youth unemployment specifically, he advocates a special contract that would allow young people to work in the public or nonprofit sector and acquire qualifications/skills that would improve access to the regular labour market. He also proposes to lower the pension age to 60 while raising the minimum pension to the level of the minimum salary, a measure that is aimed both at reducing unemployment and raising pensioners’ living standards.

 

Benoît Hamon

 

The candidate of the Parti socialiste, Benoît Hamon, plans to replace the Loi El Khomri with a new labour law. This law shall encourage the reduction of working hours on a voluntary basis and improve working conditions. The social economy sector would be enlarged from 10 percent now up to 20 percent of French GDP by 2025. Hamon intends to increase the minimum wage as well as basic benefits.

 

An issue getting widespread attention during the election campaign is his (several times adjusted and/or modified) idea of a basic income (Revenue universelle d’existence, RUE or UBI in English). He proposes that everyone between 18 and retirement age who earns less than 1.9-times the minimum wage (that is a gross income of €2,812), would be eligible to receive the basic income. Unlike with current unemployment benefits, eligibility is unconditional.

 

Hamon states the RUE would amount to €600. Yet, as it would be individually calculated depending on other personal revenues, including wages and social benefits (e.g. family, housing, unemployment benefits), not everyone would receive the same amount. According to Hamon’s campaign, 19 million French, i.e. 30 percent of the population, would be eligible, at an estimated cost of €35 billion. To finance his plans, Hamon inter alia proposes to reduce corporate tax credits in order to generate €15–20 billion. He also proposes the idea of a tax on robots to generate €5–10 billion, a “superprofit tax” for banks and an increase in public debt by €5–10 billion.

 

Emmanuel Macron

 

The programme of Emmanuel Macron, the head and founder of the En Marche! movement, does not touch the 35-hour work week and proposes that, where possible, collective negotiations shall be decentralised and take place at firm-level. The conclusion of firm-level agreements is prioritised to the conclusion of agreements covering the whole sector. Social charges shall be reduced in order to push purchasing power.

 

Macron plans to introduce a universal unemployment insurance, also covering those who quit their job upon their own wish. But Macron links this universal coverage to the condition that the recipient actively engages in searching for a new job; if two job offers fitting the individual’s qualifications are refused or if the individual’s job search lacks commitment, he/she may lose the right to receive unemployment aid. Additionally, as part of the investment plan, Macron wants to invest greatly in further education and skills training. He further proposes a universal pension system, replacing the separate systems currently in place in France. Macron intends to adhere to the retirement age of 62, but also proposes that those who want to work beyond that shall have the opportunity to do so.

 

François Fillon

 

Liberalising the labour market is a high priority for Fillon, the candidate of les Républicains. He sees this as a key measure to improve France’s competitiveness. One of his central propositions is to abolish the 35-hour working week and let social partners set working time at company level. As for the public sector, Fillon intends to introduce a 39-hour working week.

 

In tackling high youth unemployment, Fillon wants to create a better system of apprenticeships and alternating in-company training that would facilitate better integration into the labour market. Fillon’s manifesto sets out the intention to reduce unemployment not only via better conditions for job creation but also stronger activation of unemployed persons. This is supposed to take place by introducing a reduction of unemployment benefits should the recipient reject a job offer.

 

Marine Le Pen

 

Marine Le Pen, the far-right candidate of the Front National, has harshly criticised the labour market reforms under Hollande’s presidency and would scrap the Loi El Khomri. While keeping the 35-hour working week as a general rule, she would allow certain branches to negotiate 37 or 39 working hours a week which would have to be fully paid. She also wants to set the entry to retirement at 60 years or after 40 years of contribution payments. Le Pen further proposes to introduce a “national employment priority”, by which she would introduce “a tax on every new contract with a foreign employee” – which would be incompatible with the EU rules governing the Single Market. Her main strategy against high unemployment is a re-industrialisation policy further underpinned by protectionist measures. In addition, she intends to privilege French companies for all public procurement.

 

Missed part one or want to skip ahead? You can click here or here to go directly to part one or three of this mini-series.

 

Selection of Sources:

 

Bertelsmann Stiftung (ed.). Social Justice Index. Gütersloh 2016.

Bertelsmann Stiftung (ed.). Sustainable Governance Indicators, Country Report France. Gütersloh 2016.

European Commission. Eurobarometer 86. Brussels 2016.

Eurostat. Eurostat Dissemination Database. Luxemburg 20.03.2017.

Geoffroy, R., and A.-A. Durand. Qui bénéficierait du revenu universel de Benoît Hamon? Le Monde 15.03.2017.

LOI n° 2015-990 du 6 août 2015 pour la croissance, l‘activité et l‘égalité des chances économiques.

LOI n° 2015-994 du 17 août 2015 relative au dialogue social et à l‘emploi.

LOI n° 2016-1088 du 8 août 2016 relative au travail, à la modernisation du dialogue social et à la sécurisation des parcours professionnels.

OECD. OECD Data. Paris 2017.

OECD. Employment Outlook 2016: How Does France Compare? Paris 2016.

OECD. Society at a Glance: Equity Indicators, Social Spending. Paris 2016.

Poingt, G. Benoît Hamon „gauchise“ son programme économique. Le Figaro 16.03.2017.

Rabreau, M. En France, 70% des embauches sont des CDD… de moins d’un mois. Le Figaro. 12.04.2016.

Piketty, T. Of productivity in France and in Germany. Le blog de Thomas Piketty. Le Monde 09.01.2017.

Teinturier, B., and Dusseaux, V. Les Français, l’économie et la réforme de l’Etat. Ipsos Public Affairs. Paris 2016.

 

 

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