A Service of Leibniz-Informationszentrum econstor Wirtschaft Leibniz Information Centre Make Your Publications Visible. zbw for Economics Nikolka, Till; Poutvaara, Panu Article Labour Market Reforms and Collective Bargaining in France ifo DICE Report Provided in Cooperation with: Ifo Institute – Leibniz Institute for Economic Research at the University of Munich Suggested Citation: Nikolka, Till; Poutvaara, Panu (2019) : Labour Market Reforms and Collective Bargaining in France, ifo DICE Report, ISSN 2511-7823, ifo Institut – Leibniz-Institut für Wirtschaftsforschung an der Universität München, München, Vol. 16, Iss. 4, pp. 44-49 This Version is available at: http://hdl.handle.net/10419/199048 Standard-Nutzungsbedingungen: Terms of use: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Documents in EconStor may be saved and copied for your Zwecken und zum Privatgebrauch gespeichert und kopiert werden. personal and scholarly purposes. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle You are not to copy documents for public or commercial Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich purposes, to exhibit the documents publicly, to make them machen, vertreiben oder anderweitig nutzen. publicly available on the internet, or to distribute or otherwise use the documents in public. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, If the documents have been made available under an Open gelten abweichend von diesen Nutzungsbedingungen die in der dort Content Licence (especially Creative Commons Licences), you genannten Lizenz gewährten Nutzungsrechte. may exercise further usage rights as specified in the indicated licence. www.econstor.eu REFORM MODEL REFORM MODEL Till Nikolka and Panu Poutvaara lenges facing the French economy. The proposed meas- Figure 1 even without the backing of a ures emphasized reforming labour market regulation union, and the lack of a “peace Labour Market Reforms Harmonised Unemployment Rates in Germany and France and the collective bargaining system in France. As part As a percentage of the civilian labour force obligation” to rule out strikes, and Collective Bargaining of its evaluation of a proposed reform package, the Germany even once an agreement has 1 French Senate invited the ifo Center for International France been reached resulted in a in France % Institutional Comparisons and Migration Research to 14 large number of strikes. Fur- compare the institutional settings of employee rep- thermore, strikes could also be 12 resentation and collective bargaining in France and initiated on topics not covered Germany, and to evaluate the proposed reforms. In this 10 by collective bargaining, like article, we describe the regulation of workplace rep- government policies. 8 resentation and collective bargaining in France, com- Before the recent labour INTRODUCTION pare the main features with the regulatory framework 6 market reforms in France, par- in Germany, summarise our 2016 evaluation for the ticipants in collective bargain- 4 After the financial crisis, Germany experienced a boom- French Senate, and discuss subsequent developments ing were exclusively trade ing economy with steadily decreasing unemployment and perspectives for the French economy. 2 unions and the employers or rates. The growth rate in France, by contrast, was con- We start by presenting the institutional and eco- 0 employers’ associations. Trade siderably lower during this period, while unemploy- nomic situation in France before the 2016 labour mar- 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 unions represent distinctive ment increased steadily from 2008 until 2015, then ket reforms were implemented. We then summarize Source: OECD (2018). © ifo Institute professions, so several trade declined modestly. High unemployment and low and discuss selected reform proposals by Combrexelle unions are usually present in Till Nikolka growth rates led to disillusionment with traditional (2015). This is followed by a description of the proposed one company and take part in ifo Institute. political parties. Both traditional mainstream left and and implemented reforms, first under the Valls govern- Figure 2 collective negotiations. traditional mainstream right candidates failed to make ment and then once Macron was elected president. Even before the recent it to the second round in France’s 2017 presidential Finally, we discuss the presented reform measures in Nominal Unit Labour Cost, % Changes and Index changes to the labour law, only election. Instead, French voters faced a stark sec- the context of a shift towards more decentralised bar- Index baseline 1995 = 100 those unions that fulfilled cri- ond-round choice between pro-European Emmanuel gaining in Europe. Germany teria of representativeness, Macron who had launched a new centrist party and % France which means they need a promised to reform the economy to boost growth and LABOUR MARKET DEVELOPMENTS IN FRANCE 140 minimum of 10% of votes by employment, and nationalist Marine Le Pen who repre- employees at a company level 130 sented the far-right National Front and promoted pro- Figure 1 reports harmonised unemployment rates for (8% at industry and national tectionist policies and opposed liberalizing reforms. France and Germany. During the 2000s and before the 120 level) could be represented Panu Poutvaara Macron won 66% of second-round votes. His newly financial crisis unemployment rates were higher in Ger- in a company. Furthermore, ifo Institute, established party won an absolute majority in subse- many than in France. In Germany, the unemployment 110 collective agreements were Ludwig-Maximilians quent parliamentary elections, on a platform to pro- rate peaked at 11.3% in 2005, while it was at 8.9% in only valid if the representative University Munich, 100 CESifo, CReAM mote economic growth and labour market reforms. France during the same year. In 2008, the unemploy- trade union won 30% of votes and IZA. Less than 20 years earlier, Germany had suffered ment rate was 7.4% in both countries. After the financial 90 at elections at a company/ from high unemployment rates and low growth, per- crisis, the unemployment rate in France increased to industry or national level. If dif- forming worse than France and most other EU coun- 10.4% in 2015, then dipped to 9.4% in 2017. In Germany, 80 ferent collective agreements tries. During the 1990s, many collective bargaining unemployment steadily declined to 3.8% in 2017. The 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 were valid for one company, agreements in Germany started to include opening OECD (2017b) as well as the IMF (2009) document a sig- Source: Eurostat (2018). © ifo Institute usually the one with the better clauses allowing for derogations and more flexibility at nificant deterioration in France’s export performance Note: 1995: 100%; Nominal unit labour cost are defined as the ratio of total labour costs to total labour productivi- condition for the employees the regional or company level.2 In 2003, a coalition gov- during the 2000s due to a structural deterioration in ty; 2016 and 2017 data for France provisional, Source: Eurostat (2018). applied – the so-called favour- ernment by the Social Democrats and Greens initiated competitiveness. Figure 2 illustrates that between 1995 ability principle. Even although the so-called Agenda 2010 reform package, with an aim and 2008 nominal unit labour costs increased by 20 per- (Combrexelle 2015) aimed at improving the functioning collective agreements were possible at the regional or of boosting growth and employment. The name Agenda centage points in France, but remained almost of the collective bargaining system, by giving priority to company level, the scope of collective bargaining was 2010 refers to the European Union’s Lisbon Strategy unchanged in Germany, resulting in a major boost to company-level agreements regarding wages, working usually the national level. The possibility to extend col- from 2000, with its ambitious (but ultimately unful- German competitiveness vis-à-vis France. Subse- time and working conditions. lective agreements in France if they contained subjects filled) target of making the European Union “the most quently, wage growth picked up in Germany, but in 2017 defined in the Labour Law, was frequently used. Due to competitive and dynamic knowledge-based economy Germany was still considerably more competitive than COLLECTIVE BARGAINING IN FRANCE COMPARED the practice of frequent extension of collective agree- in the world” by 2010 (Lisbon European Council 2000). France. Overall, unit labour costs increased from 1995 WITH GERMANY BEFORE THE 2016 REFORMS ments by the state, the collective bargaining coverage The German economy subsequently recovered, and the to 2017 by 14 percentage points more in France than in has remained consistently high in France (98% in 2012 unemployment began to decline in 2005. Germany. Labour unions and employer organisations play an according to worker-participation.eu (2018)). Germany’s turnaround inspired French politicians In a bid to boost an economy with falling international important role in both France and Germany. Before the Like in France, trade unions, employers or employ- to try and reignite economic growth in their country competitiveness, persistently high unemployment, 2016 labour market reforms, a central difference ers' associations in Germany generally participate in