French Unions shut down Country to Protect Labor Aristocracy.

Protesters have taken to the streets the pas four months.

Gas stations ran dry last week when unions blocked the refineries.  Other employees threatened to shut down nuclear reactors.  Public transport is expected to grind to a halt this week.  Police, teachers, prison guards and more are joining the movement. All of this to protest a mild labor reform law aimed at reducing unemployment.

President Hollande insists he will not back down even though violence in the streets, despite a state-of-emergency, has the government fearing tourists will stay away this summer.

It is truly a case of ‘The Cid‘ in which there is no honorable way out for all sides meaning the worst is possible.

Among the measures in the labor reform bill is the possibility for companies to lay off workers after four quarters of negative growth which is still far tougher than in the UK and Germany where employers can make workers redundant fairly easily.

But the movement in France has also turned into a struggle for survival and relevance for the labor unions which control much of the public sector where workers enjoy generous advantages: retirement at 55 instead of 63 with pensions based on the last six months of salary rather than the best 20 years; life long guarantee of employment; six weeks paid vacation rather than the four mandated etc. (privatized former state run companies maintained their public sector collective bargaining advantages).

Article 2 of the new law, which counts 60 of the 220 pages in the bill, allows companies and their employees to negotiate more flexible working hours, rather than forcing employers to negotiate sector-wide collective bargaining through the unions. The maximum hours of work per day will go to 12 from ten and to 46 a week from 44 average over three months, with 60 hours maximum in one given week during that period.  The minimum bonus for over time will be brought down to 10% from 25%.  Because unions can be by-passed in the new bill, they have drawn a red line in the sand on Article 2. France practices the 35 hours work week, the shortest in Europe, but the average worked is 37.5 hours.

“Article 2 is the only interesting disposition left in the law,” says Pierre Gattaz, head of the French employers association known as the Medef.  “If Article 2 is removed, we will ask that the proposed law be withdrawn.”

The violence could frighten off tourists.

Gattaz regrets the government backed down before union pressure and removed important parts of the law such as capping the amount a worker could get in compensation if he is laid off or allowing employers to let employees go without having to go through the French labor courts known as Prud’hommes. The government also scrapped the part of the bill which would allow employers to renew temporary contracts without obliging them to make it permanent after two renewals.  “Bosses are afraid to hire,” Gattaz said in an interview in the French daily Le Monde.

Gattaz angered the CGT union when he compared their tactics to “acts of terrorism”  and called on the government to enforce rule of law. “It seems to me we are in a Stalinist dictatorship.”

France hosts the European Cup from June 10 to July 10.

Unemployment in France is 10.5% while in the UK it is 5.4% and in Germany 4.8%.  But among those youth of North African and Black African origin who live in the projects, unemployment is 45%. Given the difference in the figures between France and its partners where labor laws are much more lax, Gattaz may have an argument.  It is quite possible that those unemployed youth who are not members of the ‘labor aristocracy’ would rather fewer labor protections if it meant they could get a job. “The CGT equals unemployment,” Gattaz said.

France’s annual average wage was $47,885 in 2014 – compared to $48,479 in Germany and $54,350 in the UK.  But taxes employers have to pay on labor are the highest in Europe and there is talk of increasing them yet again to cover part of the deficit of the French unemployment compensation bureau, called Pôle emploi. “We have to reduce the cost of labor and welfare taxes,” Gattaz told Le Monde. “Are we really looking to improve the competitiveness of our companies and thus reduce unemployment?”