Forecast Highlights
French President Emmanuel Macron's economic reform agenda will face stiff resistance from unions and other social groups.
Though union membership is declining in France, labor groups will remain capable of disrupting the country's economy.
Macron's government will try to exploit divisions among unions and make symbolic concessions to get most of its reforms approved.
Emmanuel Macron won this month's French presidential election on a promise to balance state intervention in the French economy and reforms intended to make it more competitive. His electoral platform included a promise to introduce public investment initiatives worth some 50 billion euros (roughly $56 billion) over the next five years, for example, but it also includes proposals to make labor laws more flexible and to cut public sector spending by 60 billion euros.
The new president's ability to implement his agenda will hinge, in part, on the backing it receives in the French National Assembly. Parliamentary elections will take place in two rounds next month, on June 8 and June 15, and opinion polls suggest that Macron's En Marche! party is close to winning a majority of seats. Should the president's party fail to secure a majority, it will be forced to form alliances with other parties to pass legislation. This could take the shape of a formal coalition of two or more parties, or of ad hoc negotiations with the opposition.
Macron's political strategy has two parts: The first involves appointing people with no previous political experience as ministers and candidates for the National Assembly. Half of Macron's candidates for the legislative elections are newcomers to politics, and several of the members of Prime Minister Edouard Philippe's Cabinet do not belong to France's mainstream parties. This approach allows Macron to honor his campaign promise of injecting new blood into France's political institutions.
The second part involves attracting the support of members of parliament from both the center-right and the center-left. This is intended, in part, to give Macron's government greater policymaking experience in his government. But the president also wants to generate conflict among rival parties. Both the Socialist party and, especially, the Republican party are divided on whether to support the new president.
The Powerful Tools Unions Still Have
Meanwhile, Macron will also face social resistance to his economic reform plans. Trade unions, in particular, will oppose his proposals to cut public sector jobs and to relax labor regulations. French unions are considerably weaker today than they were in past decades. Fewer than 10 percent of French workers currently belong to a union, down from around 20 percent in the 1970s. (In Italy, by comparison, around four in 10 workers are still members of a union.) Membership in French unions is still relatively high in the public sector (around 14 percent), but it's negligible in the private sector (around 5 percent). Moreover, French unions are fragmented, with five large confederations representing hundreds of smaller unions. These umbrella groups are not always on the same page when it comes to collective action; protests and strikes, for example, are often supported by some unions but rejected by others.
Despite their declining membership and fragmentation, French unions still have two potent tools at their disposal. The first is their ability to mobilize members to disrupt the French economy. Unions have the capacity to paralyze France through strikes on critical infrastructure such as railways, airports, oil refineries and power plants. Even if short-lived, these episodes can disrupt the transport of people and products, generating significant losses for companies in the private and public sectors alike. In mid-2016, for example, protests against a labor reform proposal promoted by then-President Francois Hollande blocked roads, railways, airports and ports across the country. Oil refineries and depots were also blocked, temporarily causing fuel shortages. Unions can also wield influence directly in the workplace as employee representatives, forcing company managers to consult with them on decisions big and small. Unions are also joint managers (along with business representatives) of France's healthcare and social-security systems.
Union protests tend to be at least partially successful, often forcing governments to review parts of the contested legislation. Hollande's labor reforms, for example, were still introduced despite the protests. But the final version of the law excluded an original measure that would have capped severance payments for workers who have been wrongfully dismissed — the same reform that Macron wants to adopt. Hollande's victory was a Pyrrhic one, however, as he imposed the reform by decree, bypassing the National Assembly. This only intensified internal dissent within the governing Socialist party. Unions, meanwhile, accused the president of overreach, while employers' organizations complained that he had not gone far enough.
In recent years, several non-union groups and associations have also begun organizing to influence government policy — sometimes cooperating with unions, and other times competing against them. Some episodes of unrest stem from single-issue groups protesting a specific policy, such as with the "bonnets rouges" protests against a motorway tax in the Brittany region in 2013 or the conservative "Manif pour tous" demonstrations against same-sex marriage between 2012 and 2014. In other cases, protests express discontent with multiple issues, such as the "Nuit debout" demonstrations of 2016 against political institutions and the economic system. Meanwhile, opposition parties such as the right-wing National Front and the left-wing Unsubmissive France have also been known to urge their voters into the streets.
Negotiations and Protests
Macron's government is still working on the details of its labor reforms, but the proposed changes will probably include capping severance payments, weakening the role of collective bargaining in favor of agreements at the company level, redesigning the unemployment insurance system, and reducing social security contributions for businesses. Employers' organizations such as the Movement of Companies in France and the Confederation of Small and Medium Enterprises have already expressed their support for the president's proposals.
On the contrary, the unions are worried about another labor reform so soon after the last one, which was introduced only a year ago. Most unions have moved cautiously in recent days, asking only that the president consider their concerns, while refraining from openly attacking the new leader. Laurent Berger, the leader of the French Democratic Confederation of Labor, said his union would be neither "a docile ally" nor an inflexible opponent to Macron's government. Jean-Claude Mailly, the secretary general of Workers Force, said he was "ready to discuss" Macron's plans. Philippe Martinez, the leader of the generally more combative General Confederation of Labour (CGT), was more explicit in his criticism of the proposed reforms and asked the president not to implement them. Some CGT unions, in fact, held small demonstrations between the two rounds of the presidential election.
But Macron will probably move to approve the reforms as quickly as possible in order to take advantage of the momentum generated by his election. Indeed, Philippe, the prime minister, recently said his government will try to overhaul the labor law quickly, explaining that he does not plan to "wait two years" to introduce the reforms. Ideally, the French government would like to pass the legislation around July or August, but the process could be delayed.
According to French law, labor reforms have to be preceded by consultations with both unions and employers' organizations. During meetings that began May 23, the government, the unions, and the employers will try to reach common ground on the reforms before deciding their next moves. But proposals such as capping severance payments have already been criticized by some of the unions. Protests and strikes cannot be ruled out during and after the negotiations, as often happens with such sensitive issues in France.
Macron will therefore have to make a choice. Caving to pressure from unions so early in his presidency could create a negative precedent that would weaken the leader from the start. But a direct clash with unions would also lead to a hostile environment that could undermine the rest of his economic agenda. The unions, in the meantime, will have to find a balance between defending their interests and avoiding being viewed by the general public as an obstacle to reform. Macron will probably seek to take advantage of the divisions among the unions by trying to reach a deal with moderate federations such as the French Democratic Confederation of Labor and to endure protests by the most combative federations, such as the General Confederation of Labour.
The composition of the National Assembly will be equally important, as the president will feel more confident about his reforms if he controls a solid majority in the lower chamber. Macron could decide to pass the reforms as "ordinances" (a procedure that allows the government to introduce legislation without a parliamentary debate), but that would still require ratification by the National Assembly at a later stage. Finally, though the president has the constitutional power to bypass lawmakers and impose the reforms immediately, without a vote, this could trigger a no-confidence motion against the government. He is unlikely to choose that option so early in his presidency. The government's performance during the crucial test of labor reform will set the tone for the rest of Macron's presidency.
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