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11/12/2016

French attempt to ‘liberate’ the economy ends up adding new regulation

Innovation & Industry

French attempt to ‘liberate’ the economy ends up adding new regulation

The French Parliament is due to vote on part of the "loi Macron" on Tuesday 17 February.

[Funky Tee/Flickr]

Emmanuel Macron’s economic bill, designed to show the European Commission that France is serious about reform, will also submit parts of the economy to a glut of new regulations. EurActiv France reports

“We have been really surprised by this legal UFO, even if it does contain some good things,” said a Minister for European Affairs of a founding EU state.

The French Parliament, which is set to vote on the first two chapters of the text on Tuesday (17 February), will probably agree.

After 193 hours of debate, the bill known as the “loi Macron,” after the French Minister of the Economy, is well-accepted by conservativrs, although the centre-right opposition UMP plans to vote it down on principle.

The law has mainly stirred up dissent in the governing Socialist Party, which, on the one hand, sees it as a gift to the European Commission’s neoliberal agenda, and a defeat of Germany’s push for austerity, on the other.

>> Read: Commission hails French economic bill as ‘a step in the right direction’

Prime Minister Manuel Valls has called on party members to vote responsibly, but the bill’s success is not a foregone conclusion.

Former Education Minister Benoit Hamon, a hardline Socialist who ranks among the “slingers” in the majority, said he would vote against it.

Sunday work in the crosshairs

Article 80 of the loi Macron, which would authorise employees to work on 12 Sundays per year, instead of the current 5, is the most controversial part of the bill.

Some see it as a minor modification, while for others it constitutes a breach of the French social system. The left wing of the Socialist Party wanted to secure greater compensation for Sunday workers, beyond the double pay required under French law.

Former Culture Minister Aurélie Filipetti’s proposal to keep libraries open on Sundays was adopted into the Macron bill, despite doubts over its expected benefits in terms of economic growth.

Economic liberation through deregulation?

In fact, many of the changes introduced under the “loi Macron” appear to add to, rather than reduce, the amount of regulation weighing down the French economy.

The first chapter, meant to “liberate” growth, has introduced a host of new rules, including new and even more complicated tariff structures for some regulated professions, for example notaries.

Louis Vogel, a professor of law, said that under the newly-proposed system, notaries would be subjected to three categories of tariffs, each with different rules. He added that “all this regulation increases costs and the weight of administration, and often leads to abstract and unrealistic solutions”.

More regulation

The Macron bill also contains new regulation regarding posted workers, an issue that has caused debate in the EU for years.

>> Read: MEPs approve ‘imperfect but improved’ protection for posted workers

Under article 14 of the bill, all lorry drivers working in France will have to be paid at least the minimum wage. Far from meeting with resistance from the industry, this proposal has been welcomed by the General Confederation of Labour, the union representing lorry drivers.

But the introduction of “international tourist zones” is causing controversy. The government wants to give itself the power to define these zones, but the Mayor of Paris, Anne Hidalgo, has criticised the plan as “antidemocratic,” and a way of centralising power. Businesses in these zones would have special privileges, including being able to open on Sundays.

Environmental credentials under attack

A system allowing energy-intensive industries like aluminum or chemical producers to access preferential tariffs for hydro-electricity is among the many measures buried in this all-encompassing bill.

This has been criticised for its lack of environmental vision. The French Electricity Union (UFE), which represents the country’s electricity producers, said “It is the efficiency of the French energy-intensive industries that is the issue, particularly in comparison with Germany, where more modern, more efficient equipment allows the energy-intensive sectors to consume 20% less than their French counterparts”.

>> Read: Outdated environmental reasoning in the ‘loi Macron’ (in French)

More generally, some MPs have criticised the bill, saying that the number of measures it aims to cram in will not necessarily give it a high economic impact. The privatisation of Toulouse, Lyon and Nice airports, for example, will not provide significant revenue to the government.

But the Commission, which is keeping an eye on the process from a distance, has tentatively welcomed the Macron bill, as “a series of small steps” in the right direction – a politically expensive endorsement for the French government. 

Positions

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Background

The aim of Emmanuel Macron's bill is to "unlock the French economy". Manuel Valls' government describes its priorities in the following terms:

  • To remove barriers to work: Opening certain sectors and professions, such as coach transport, the regulated professions, or even housing and commercial urbanisation.
  • To invest: Renewing the state shareholder intervention system, better managing public service delegations and public-private partnerships, and reforming employee shareholdings.
  • To work: Review the industrial tribunal system and make it easier to work on Sundays.

Further Reading