French and Germans up in arms over labour reforms

Strikes in two of the EU’s biggest economies are directly linked to core measures planned by the French and German governments to meet Lisbon targets. They put a question mark on their ability to implement painful socio-economic reforms.

The protests in the two countries indicate the difficulties member states have in pushing through essential labour reforms and easing burdens on their economies. They demonstrate what Luxembourg Prime Minister Jean-Claude Juncker said in 2005: “We know exactly what to do, but we do not know how to win the next elections once we have done it.”

On the reasons why governments such as that of Germany are reluctant to make the rise of the pension age part of their Growth and Jobs National Action Plans, 
Chief Executive Hans Martens told EURACTIV: "It is obvious that with higher life expectancy and lower birth rates the working life must continue longer than is the case today. But even if the logic is clear, this is one of the most unpopular reforms to propose, and many politicians are avoiding it for exactly that reason. Many people want early retirement, which could indicate that they are more tempted by doing other things than the work they have done for many years, which perhaps in itself is a problem. The general issue is that Europe needs structural reforms in many areas, including this one, but politicians generally don't like structural reforms, because they can be quite unpopular, and because the effects of the reforms are not immediate, but take time to deliver as opposed to for example fiscal policy and monetary policy. This is probably also the explanation why the broad coalition in Germany can not really contain this issue. 

On the strikes in France, Martens said: "The main lesson is that France needs reforms and that it needs them quickly. In the existing system the law gives a kind of 'protection' to the individual that the labour market does not deliver any more. One of the results is the high degree of insecurity on the French labour market, including the big fears of globalisation and the 'Polish plumber'. The flexicurity reform would be really good for France, because it provides the flexibility needed but with a high degree of special security which works much better than in the present French system. This does not mean introducing flexibility of the Anglo-Saxon neoliberalistic type, but a system which combines flexibility with real security for the individual. However, introducing an active labour market policy requires reforms in the public sector, which needs to become much more efficient than is presently the case in the rather old fashioned French public administration. As the trade unions in France do not represent more than around 10% of the work force, and they over-represent the public sector, you would have expected the noises. But France would be much better off with modern, efficient trade unions like in the Nordic countries, that are covering the whole, and not just a fragment of, the labour market." 

speaker Patricia Grillo  told EURACTIV: "What is going on in France is more in relation to labour law and less so to a flexicurity agenda, because it is bout giving employers authorisation to hire and fire employees as it pleases them. So there is no link to flexicurity, which tends to be an agreement between employers and employees, whereas in this case employees don't have any right to decide themselves."

Germany is currently experiencing the first strike in the country's public sector in the last 14 years. The walkout, which is coordinated by ver.di, the national trade union for the services professions, affects more than 10,000 workers in refuse collection, hospitals and kindergardens in the southern Land of Baden-Wuerttemberg. They are protesting local authorities' plans to extend their employee's working time by 1½ hours to 40 hours. 

More strikes may follow: In the northern Land of Lower Saxony and in the city of Hamburg, employees of local authorities are voting whether to join the strike, while throughout the country 60,000 employees with regional authorities are voting on a strike to protest against similar plans. Trade unions say they can sustain the strike for up to six weeks. 

The strikes are taking place only weeks after the announcement of Germany's newly elected cross-party government to raise pension and retirement ages from the present 65 to 67 years before 2029. The rise in the retirement age as well as longer working hours per week are central elements of the Merkel government's strategy to put the country's sluggish economy back on track. Still, the government  decided not to mention them in Germany's Jobs and Growth National Action Plan - presumably in order not to put the Action Plan at the centre of national protests. The resistance that both projects are now meeting puts a question mark behind the government's chances of finding public support for the more painful elements of the Lisbon strategy. 

In France, the conservative UMP party has not found any ally in the national assembly to vote in favour of the disputed Contrat première embauche (CPE = 'First employment contract'). President Jacques Chirac's party had enough votes, however, to adopt the amendment to the French law on equal opportunities against opposition from all other parties. The law, which according to its authors is modelled on the Nordic flexicurity concept, will allow employers to fire young employees up to the age of 26 without giving any reason within the first two years of their employment. Prime Minister Dominique de Villepin says that the law, which despite its name applies not only to first-time employments, is crucial for getting France's economy going again. 

After the first strikes on 7 February 2006, trade unions and students' unions will decide on 10 February how to follow up on the vote. On 7 February, up to 400,000 people throughout the country took part in 187 demonstrations against the project, which was voted in the national assembly the following day. The protests were organised by all the national trade unions (CGT, CFDT, CFTC, FO, UNSA, FSU), by almost all of the national youth organisations and by students' and pupils' unions. 

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