Accoce Jean-Vincent ADEK member Mail : [email protected] Reactions to the crises of European economic integration: country study: France Paper for the 10th Workshop of the R.N.A.P: —Macroeconomics and Macroeconomics Policies. Alternatives to the orthodoxy“ Berlin, Germany Abstract According to European analysts, the negative vote to the treaty establishing a constitution for the European Union proved that France is locked up in its social model . Necessary labour market reforms seem to be impossible because of powerful trade unions. The recent reject of the CPE (new work contract supposed to facilitate the entrance of young workers on the market) is a typical illustration of this vision shared by French and European politics. Before hostile reactions of trade unions towards this contract, a survey (CSA: 28 of January 2006) revealed that 52% of French people were favourable to the instauration of this contract. After trade union mobilizations and student strikes, surveys showed a trend reversal (Ipsos, 25 of March 2006: 63% of French people against the instauration of the CPE), highlighting the massive reject of this new contract in the French society. This example could let us think that French trade unions, which are not very representative of workers, are able to prevent governments from reforming. Is it true? Can we find the origins of French social sclerosis in trade unions? In my paper, I will show that this very popular vision is wrong. Trough the example of two recent modifications of the labour legislation (the reduction of labour time known as the 35 hours reform and the instauration of a new work contract, the CNE), I will underline the key role of trade unions in the success of labour market reforms. 1 (1) Introduction The French reject of the treaty establishing a constitution for Europe (TECE), in May the 29, 2005, was a thunderstruck. Many of French politicians, especially those who campaigned for the instauration of the treaty, perceived this vote as a —divorce“ between French and politic. Obviously, the famous French social fracture (Trademark and determinant leitmotiv of Jacques Chirac in Presidential 1995) has never been so present than after this vote. One year after, a survey (AFP) concludes that 98% of French who voted no would make the same vote (this survey also concludes that 10% of people who voted yes regret it and that the no would gather 58% of French) 1. This situation proves that, contrary to what some said after the referendum, the reject of the treaty wasn‘t circumstantial. It wasn‘t only the expression of a sanction against Jean-Pierre Raffarin‘s government. Likewise, despite of nationalists‘ analyses, this vote wasn‘t a rejection of European institutions. Most of French who rejected the TECE admitted afterwards that they believe in the European Union and in its actions. It appears that French rejected the TECE because of its consequences on the European and national institutions. Fruit of a consensus between all European countries, this treaty strangely gave a key role to markets in order to regulate the European Union. This consensus is strange because, historically, the E.U. was built thanks to strong European governments interventions. It seems that the consensus around the part III of the TECE was inspired by the English economic success. Still, in France, this consensus triggered lots of reactions during the campaign and finally brought French to reject the whole treaty 2. Why this reaction in a country which never knew a real liberal experience? Two types of answer can be found. First, we can explain it by the fear to lose the leadership in the E.U. Entrances of new countries in the Union and instauration of liberalism can obviously have consequences on the balance of powers between European states. France was, with Germany, at the origin of the European Union, but can lose its leadership in a Union where, finally, only markets matter. Second, and more fundamentally, it seems that French are more and more frightened by the so-called ultra liberal society. This society was promised by the third part of the TECE. One could say that this behaviour is amazing. Actually, no real experiences of liberalism have ever been initiated in France. Culturally, State always played a key part in the regulation of economy. This behaviour, based on the idea of intergenerational and interclass solidarity, built the famous French social model . Constitutionality of competition, supposed by the treaty, was perceived by French as a threat for this model. The referendum was an occasion for French to prove their attachment to this social model and to claim that another Europe should be considered. Abroad, this attachment is perceived as the expression of the immobility of French institutions. Even in France, some politicians underline that France can‘t be governed and above all can‘t be reformed. They also explain that the French social model , cherished by French, is sclerosed because of the action of powerful trade unions. Their actions would forbid all types of reform, especially on the labour market. Actually, the negative vote to the TECE is partly due to the trade unions mobilization. They thought that the third part of the 1 AFP Mai (2006) 2 A survey (TNS, SOFRES) concludes that motivations of 57% of people who voted no were unemployment consequences of the Treaty in Direction Générale —Presse et communiquation“ de la commission européenne. (2006): la constitution européenne : sondage post-référendum en France. 2 treaty was an attempt of global reform of the European labour market in general and particularly of the French one. Objectively, we can feel a disease each time a government want to reform the national labour market. Recently, trade unions helped students in their mobilization against the CPE ( Contrat première embauche literally first job contract). This new labour contract, dedicated to young people under 26, was supposed to facilitate their integration on the labour market. In fact, it was an attempt to make this segment of the market more flexible. Trade unions mobilization was strong and their support to students‘ strikes was crucial in the CPE retreat. In the light of this event, French people could actually ask themselves if their country can be governed. Everybody in France feels the need of important reforms but it seems impossible for a government (no matter if they are liberal or not) to initiate a reform without provoking strong reactions from trade unions. Lots of French politicians relay this idea making French feel guilty for their support to their trade unions. But the problem isn‘t as simple. The aim of this paper is to prove that it‘s because of the weakness of trade unions that France can‘t be governed. In the light of two major examples of labour market reforms, reduction of the official labour time (known as the 35 hours reform ) and introduction of a new labour contract (CNE , contrat nouvelles embauches), I will emphasize that conditions of success of a reform depends on the trade unions‘ involvement in its elaboration. In the first part of this paper, I will briefly present the two envisaged reforms. I will emphasize their goal and their result. In the second part of this paper, I will explain conditions of the establishment of these two reforms. And in the last part, I will propose some reforms to facilitate the success of labour market reforms in France. More generally, this last part will deal with transmission of economic policy to the French economy. In the light of the political content of these two reforms, I would like to emphasize that I won‘t discuss in this paper the efficiency or supposed efficiency of the envisaged reforms on employment. I will only deal with their success in the light of their objective. (2) Reforming the labour market in France, two attempts: 35 hours and CNE Even if lots of analysts consider that the French labour market is rigid, we must recognize that employment legislation ( code du travail ) has been reformed several times these last ten years. Two major reforms had been adopted by the parliament: the reduction of the official labour time ( 35 hours reform ) and the instauration of a flexible labour contract available in firms which less than 20 employees (CNE). Did these reforms reach their goal? I will briefly define the two envisaged reforms and discuss their success in the light of the objectives announced before their instauration. (2.1) 35 hours: definition, objective and results The 35 hours reform has been adopted by the French parliament in June 1998. This modification of the official labour time, from 39 hours to 35 hours a week, was one of the electoral promises of the Parti Socialiste during the parliamentary election of 1997. Once invested, the socialist leader and new Prime Minister, Lionel Jospin, charged one of his ministers, Martine Aubry, to launch this important project. The aim of this reform was obviously ambitious: reduce the official labour time in all enterprises, around 320 000, in three years. To reach that goal, parliament (and plural majority) adopted two different laws, known as Aubry 1 and Aubry 2. 3 The first law, Aubry 1, adopted in June 1998, was dedicated to enterprises which had more than 20 employees. This law gave employers till January 2000 to negotiate modalities of labour time reduction ( TT : réduction du temps de travail ) with their employees. The second law, Aubry 2, adopted in January 2000, was dedicated to enterprises with less than 20 people. This law gave employers two years to reduce the weekly labour time form 39 to 35 hours. As we can see, the —dead line“ for the reduction of the official labour time was in January 2002.