French labour reforms test President's change credentials

Flavien Kulawik, head of a French business consultancy, will be listening closely Thursday when President Emmanuel Macron's government unveils its eagerly anticipated overhaul of the country's gargantuan labour code.

The KLB Group, which employs 700 people in half a dozen countries, has come a long way from its humble beginnings 21 years ago in Kulawik's living room.

Clients now include Europe's second-biggest carmaker Peugeot-Citroen and aircraft engine maker Safran.

But it has not been all plain sailing.

A dispute with a saleswoman who was laid off after refusing to relocate from a struggling regional unit nearly crippled the company when it was in its infancy.

“We nearly didn't survive it," said Kulawik, KLB's chief executive and co-founder, of the three-year labour court battle, which culminated in an award of 19 months' pay.

Shielding companies against such hits by capping court awards for dismissals is one element of a package of decrees that critics warn will erode decades of social gains.

The reforms are the cornerstone of Macron's plans to liberalise the economy to try to spur growth and drive down an unemployment rate that is stuck at 9.5 percent.

Macron, a former investment banker, wants to give small employers significantly more power to negotiate pay and conditions directly with workers, while bigger companies would get more flexibility from sector-wide agreements.

His challenge is to pull off his promised "revolution" without triggering mass protests of the kind seen last year under a more timid Socialist government.

The CGT, the country's biggest union, has already fired the first salvo, announcing a day of nationwide strikes and protests on September 12 before seeing the final draft of the reforms.

The France Unbowed party of radical leftist firebrand Jean-Luc Melenchon is also gearing up for battle, calling for a mass march against what it has billed a "social welfare coup d’etat".

But more moderate unions have so far adopted a more measured tone, and employers are cheering Macron on.

The once-bitten Kulawik believes that limiting compensation awards would lift one of the biggest obstacles to hiring, particularly for small companies.

He also backs the government's proposal to merge the myriad workers' committees in a company into a single body and to expand the use of project contracts.

These are seen as a reasonable alternative to temporary contracts while avoiding the ultra-protective permanent contract, seen as the gold standard by French workers.

Michael Zerbib, general manager of Montcocol, a civil engineering company with a staff of 60, said his chief hope was that the law would be made simpler for small businesses like his.

"For years we've been promised a simplification of the rules. But all we've seen is increasing complexity!" he said.

Bypassing the unions

An advocate of Scandinavian-style labour "flexicurity", Macron tried to disarm his opponents in negotiations with unions and employers launched soon after he took office in May.

The head of the employers' confederation Medef, Pierre Gattaz, on Tuesday urged him to stay his course.

"This labour law will be bellwether of Emmanuel Macron's presidency and his desire to really reform," he said.

For trade unions, whose membership is shrinking along with their ability to draw huge numbers onto the streets, one red flag is the government's proposal to allow employers to go over their heads in negotiating with staff.

Audrey Guidez, a human resources consultant based in the southwestern Bordeaux region, said unions would be forced to change tack.

"Rather than reacting to measures and sometimes using blocking tactics, their role will increasingly be to educate workers, which could foster more dialogue within companies," she said.

The government has promised to offset concessions to employers with greater financial security for workers.

While French subsidiaries of international groups will, for instance, find it easier to lay off staff, workers who are made redundant stand to receive higher payouts in future.

'Prophets of doom'

But the French are convinced the changes, which will be implemented by decree in September, will chiefly benefit bosses.

In an Opinionway poll published Tuesday, 68 percent of respondents said they feared an erosion of workers' rights.

There are signs that Macron may nonetheless pull off his gamble.

In the same Opinionway poll, 63 percent said the current labour code was ill-suited to the working world.

And one of the unions that fiercely resisted the 2016 labour bill, Force Ouvriere, has been far more muted in its criticism of Macron's decrees and won't join the strikes on September 12.

"We should never give in to the prophets of doom," a confident Macron told ministers returning from the summer break this week, adding: "We are where we are to act, with determination.