France has been paralyzed by a series of nationwide strikes — particularly by students — against French President Francois Hollande's proposed reforms to the highly codified French labor laws — known as the Code du Travail — in order to give employers more flexibility.
Over a million people took part in protests in early April over the labor reforms that many claim will allow employers to sack people more easily. The reforms were largely directed at making companies take on more workers on permanent contracts, rather than temporary ones, to bring down the unemployment rate from ten percent. The proposals would give employers more scope to lay-off workers and cut costs and allow some employees to work far longer than the current 35-hour week.
2) Employment protection is higher in France than in other major western countries: https://t.co/y4NDFnExl3 pic.twitter.com/Ma6ZtYCnCM
— CPS Think Tank (@CPSThinkTank) April 27, 2016
3) Labour laws are leading to more temporary contracts. Proportion of short-term contracts in France is up 11 percentage points since 2000.
— CPS Think Tank (@CPSThinkTank) April 27, 2016
According to new analysis by the Centre for Policy Studies in London, despite France reporting a 1.1 percent year-over-year economic growth rate in 2015, its unemployment rate is forecast to rise to 10.5 percent, which is over double the level observed in the United Kingdom. Nearly one in four French youths are unemployed and more than 20 percent of 20 to 29 year olds are neither in employment nor education.
Bizarre Regulations
Employment protection is higher in France than in other major western countries, according to calculations by the Organization for Economic Co-operation and Development (OECD) and HSBC.
Furthermore, the labor code is complex and imposes a range of bizarre regulations. For example, all companies that employ more than 100 workers are required to provide a nursing room with a height of at least three meters and walls covered with paint that "make it easy to clean."
4) Without reforms, competitiveness gap between Germany & France will grow, leading to further Eurozone imbalances: https://t.co/y4NDFnExl3
— CPS Think Tank (@CPSThinkTank) April 27, 2016
France's excessive employment protections are also having a downward impact on France's projected economic growth rate. The ratings agency Moody's decision to cap growth projections at 1.5 percent over the medium term has, in part, been driven by the inflexibility of France's labor market.
France's complex labor code, inefficient labor courts and a broader lack of flexibility in the labor market has not only contributed to high unemployment rates, it also appears to be promoting the widespread use of fixed-term contracts (known as CDDs in France), leading to increased insecurity for French workers.
The International Monetary Fund reports that over half of French workers below 25 are on fixed-term contracts. Furthermore, evidence suggests that the use of fixed-term contracts is growing in France. Since 2000, the proportion of new short-term contracts in the French economy has risen by 11 percentage points, according to data from Acoss.
