Flat White

When France puts you to shame with IR reform, you’re in trouble

12 October 2017

2:01 PM

12 October 2017

2:01 PM

Australia needs politicians like Emmanuel Macron – politicians who are willing to take on powerful vested interests for the sake of reform.

Sure, there’s plenty not to like about Macron: the global warming evangelism, for one thing, or his ‘bold vision’ for a beefed-up European Union.

But there is much to be admired in Macron’s economic agenda. More to the point, his success in actually implementing it should be a lesson for Australia on ‘the art of the possible’, as Macron presses ahead with the kind of reforms that we have long consigned to the political too-hard basket.

This week has seen thousands of government employees take to the streets to protest Macron’s plans to take the meat axe to France’s bloated public sector. The ensuing chaos has resulted in the closure of many schools, and the cancellation of 30 per cent of flights leaving French airports. The responsibility for the chaos lies with those resisting reform.

Macron has indicated that, despite these mass protests, he is not for turning.

But this week’s efforts pale in comparison to protests last month – in which the number of demonstrators ran into the hundreds of thousands – after Macron announced his overhaul of France’s notoriously burdensome industrial relations laws.


Macron isn’t the first president to take on France’s 3,000-plus page labour code. Several of his predecessors, from Chirac to Hollande, floated labour reforms that were either abandoned or watered down to the point of being meaningless. Macron’s reform package, by contrast, was signed into law largely unchanged late last month.

The changes represent a significant dismantling of France’s highly centralised industrial relations system. For the first time, small businesses will be able to negotiate working conditions without having a union representative present. Larger companies will be able to negotiate deals with workers on an enterprise level, rather than being bound by industry-wide awards.

Onerous red tape requirements for companies with 50 or more employees – such as the nomination of workers’ representatives and the establishment of health and safety committees and works councils – will be substantially pared back. The reforms will also abolish the bizarre power held by courts to effectively veto mass layoffs by multinational companies operating in France if it can be proven that their global operations remain profitable.

Finally, Macron’s package will substantially wind back the scope for unfair dismissal claims, capping the amount that can be awarded in damages and halving the time limit within which applications can be made.

In staring down fierce opposition from France’s powerful trade unions, Macron has been unapologetic. ‘I am fully determined,’ he has said, ‘and I won’t cede any ground, not to slackers, nor cynics, nor hardliners’. Importantly, Macron defends his reforms on the basis that they will not only boost France’s economic competitiveness but also alleviate ‘the sickness of mass unemployment’, adding that its biggest victims were the unskilled and the young. (The French youth unemployment rate sits at around 23 per cent and 9.5 per cent overall)

Not that it hasn’t cost Macron politically, with his approval ratings falling from 66 per cent in May to just 30 per cent last month.

But that’s the nature of leadership, and Macron should be commended for investing so much political capital in a difficult but desperately-needed reform.

Admittedly, it’s easier for Macron than it is in Australia. Macron’s En Marche! Party controls France’s National Assembly, whereas we have a Senate that either blocks or mangles beyond recognition anything put in front of it.

But that should not stop our politicians from having an industrial relations agenda beyond what has recently been, at best, piecemeal. Trade union governance and the antics of the CFMEU are important issues but do not address the structural overhaul that our industrial relation system needs.

With unfair dismissal applications tripling in the last decade, one in five prime-age men out of work and employers tearing their hair out at the complex and burdensome Fair Work regime, Australia needs political leaders with the gumption to start a conversation about meaningful industrial relations reform. We need a few Emmanuel Macrons of our own.

Gideon Rozner is a research fellow at the Institute of Public Affairs.

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