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Labour Reform

French PM says labour reforms 'ambitious, balanced, fair'

Muriel Pénicaud, Minister for Labour, and Prime Minster Édouard Philippe presenting the new Labour law reform
Muriel Pénicaud, Minister for Labour, and Prime Minster Édouard Philippe presenting the new Labour law reform FranceInfo screen grab

The French government said on Thursday it would cap unfair dismissal payouts and give companies more flexibility to adapt pay and working hours to market conditions in a labor reform France’s biggest union said was disappointing.

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The reform, President Emmanuel Macron’s first major policy step since his election in May, is also the first big test of his plans to reform the euro zone’s second-biggest economy.

For decades governments of the left and right have tried to reform France’s strict labor rules, but have always diluted them in the face of street protests.

The government said in a document presenting the reform that it will make it possible to adapt work time, remuneration and workplace mobility to market conditions based on agreements reached by simplified majority between employers and workers.

Workers compensation for dismissal judged in a labor court to be unfair would be set at three months of wages for two-years in the company with the amount rising progressively depending on how long a worker was with the firm, unions said.

However, normal severance pay would be increased from 20 percent of wages for each year in a company to 25 percent, Liberation reported.

The government consulted with unions for weeks as it drafted the reform, and only the hardline CGT union, the country’s second biggest, said from the start that it would hold a protest, set for Sept. 12.

France’s biggest union, the reformist CFDT, said that it would not call a strike against the reform but described the reform as a missed opportunity to improve labor relations.

French Prime Minister Edouard Philippe said that major labour market reforms unveiled were "ambitious, balanced and fair" after they met with mixed reaction from trade unions.

The moderate CFDT trade union said it was "disappointed" by the reforms, a pre-election promise by new President Emmanuel Macron, but said it would not join protests planned next month.

The boss of the hard-left Force Ouvriere (FO) union, Jean-Claude Mailly, said he disagreed with some of the changes, but like Berger suggested he would not recommend his members join street protests.

"A debate will take place in public now," he said. "Fortunately we've done our union work."

"There are differences. We accept them," Philippe said, presenting the reforms which formed the basis of three months of negotiations with the unions.

The Communist-backed CGT has already called for a strike and demonstrations against the reform on September 12.

Thursday's reforms come at a pivotal moment for Macron's domestic agenda as he seeks to encourage entrepreneurship in France, where the unemployment rate of 9.5 percent is almost double that of its large European rivals.

He argues the measures are needed to introduce greater flexibility in France's rigid labour law to encourage hiring.

"We are the only major economy in the European Union that has not defeated mass unemployment for more than three decades," he told Le Point magazine in an interview published late on Wednesday.

 - News Wires

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