In France, where unions rule, a challenge from Hollande

By Peter Gumbel
January 29, 2014

In France, taking a person hostage or sequestering them against their will is a crime punishable by up to 20 years in jail. It also happens to be a very effective weapon in French labor disputes. Since 2009, there have been 15 incidents of “boss-napping” and only one resulted in sanctions: 11 postal workers who were fined $2,000 apiece for locking up their managers during a dispute over a change in how the mail is delivered.

Most of the time, it’s the unions who win. That’s certainly the case in the most recent incident, involving a bitter struggle over job losses at a Goodyear tire plant in Amiens. Earlier this month, union officials occupied the factory and sequestered the production manager and head of human resources for 30 hours. After the government intervened, the battle finally ended last week when the company agreed to triple the severance it had offered. Union leader Mickaël Wamen didn’t hide his triumph. “It was a grand and beautiful struggle,” he wrote in a blog post on Jan. 24, announcing details of the settlement.

This type of labor militancy is the exception in Europe today; union power has taken a battering along with the economy in crisis-ridden nations such as Greece and Spain, which were once bastions of organized labor. But it’s not the only characteristic of the French labor scene that is exceptional. Although only 8 percent of French workers actually belong to a union — a tiny proportion by international standards –  French unions wield enormous political clout over the national economy. Among other things, they run the national systems for unemployment insurance and vocational training, in joint management with employers’ organizations. In fact, they formally play as big a role in setting social and labor policy as organized labor does in Scandinavia, where 80 percent or more of the workers are union members. “The political influence of French unions is abnormal,” says Radu Vranceanu, research director at ESSEC business school in Paris. “It’s not at all in line with their capacity to mobilize people.”

This issue of the disproportionate power of French unions has become the biggest challenge confronting President François Hollande, now that he has sorted out his private life. In an affront to unions — and a move critics in his Socialist Party are calling a shift to the right — Hollande is advocating a new “responsibility pact,” under which companies would see their high social security costs reduced in exchange for creating jobs. Labor unions dislike the initiative because they believe it will mean cuts to social spending, which they oppose, and they don’t trust employers to create jobs in return. Even the more moderate unions that are prepared to accept some sort of a deal are insisting on a formal list of obligations that employers must fulfill — and are calling for a new state body to ensure that these obligations are actually met.

So far it’s just an announced intention, and the details need to be worked out. Employers groups  are sounding cautiously optimistic, but union reaction has ranged from skeptical to downright hostile. In a sign of their influence and central policy role, the pact needs not only the sign-off of the major unions, but also their active participation in creating it.

Thierry Lapaon, who heads the CGT union that is both the largest and the most militant of the five officially recognized labor groups, described Hollande’s plans as “the negation of politics” and said the French president is “completely out of tune” with the expectation of ordinary people. Another union boss, Jean-Claude Mailly of Force Ouvrière (FO), has said he sees the policy as “ineffective and even dangerous.” At the Jan. 27 meeting, in the office of Prime Minister Jean-Marc Ayrault, Mailly openly stated his opposition.

It remains to be seen whether these opening salvos develop into outright opposition that kills Hollande’s initiative, or whether labor will — as it often does — end up compromising, for a price. A year ago three of the five union organizations signed off on a separate deal with employers that allows struggling companies to cut wages temporarily in exchange for safeguarding jobs. This sort of flexibility has been common in Germany for years, helping manufacturing to bounce back quickly after the 2007 financial crisis. But in France it took painstaking centralized negotiations, and even then the two most radical unions, the CGT and the FO, didn’t sign off on the measure. “Unions in France by definition are all about the preservation of what exists and opposition to any change,” says one of their fiercest critics, Agnès Verdier-Molinié, director of the IFRAP think tank.

Given their relatively small size, how does organized French labor wield so much clout? The answer is largely historical. After the Second World War, Communist-inspired officials played a key role in re-establishing social and economic life, and put in place structures that have allowed unions to maintain their official roles despite a steep decline in membership. Since the immediate post-war years, the proportion of French workers who are union members has dropped by 80 percent, according to a study by Insee, the national statistics office. Their power was brilliantly illustrated by Jean-Luc Godard in his 1972 movie “Tout va bien,” about a strike in a sausage factory.

The unions’ role today in negotiating unemployment insurance and other social issues ensures their continued financing, as they receive government funding from taxes and levies on top of dwindling union dues. Unions also benefit handsomely from regulations under which all companies with more than 50 workers must give a percentage of their payroll to an official “comité d’entreprise” or works council, which represents local workers in national negotiations. In the case of big nationalized enterprises such as the utility behemoth EDF, these employer-generated dues amount to more than $700 million per year.

The difficulty of winning union support for far-reaching economic reforms has tripped many a previous government; organized labor’s main power base is in the public sector, including transportation workers. In the past, unions have effectively mobilized against such issues as changing the retirement system, at times bringing the nation literally to a standstill. But the unions are also Hollande’s natural constituency, and may be reluctant to mount too fierce an opposition to his latest initiative. As for Hollande, the last thing he now needs is a knock-down fight with labor, so he is likely to stick with his track record in office so far, and backtrack rather than provoke.

Can the system be changed, or will French unions continue to hold a disproportionate amount of power relative to their membership? Nicolas Sarkozy, the former French president, tried to tweak the system slightly in 2008, giving unions different rights in company negotiations depending on whether more than 10 percent of the workforce of that company supported it. But so far, says Prof. Vranceanu, no government has dared to raise the bigger question of why organizations that represent so few people should have such a big say in national affairs. “It’s a taboo issue,” Vranceanu says. What it does, above all, is encourage labor militancy. And given the unions’ clout, not even the government wants to risk being taken hostage.

PHOTO: French railway workers demonstrate against President Nicolas Sarkozy’s plans to reform the economy in Lille, northern France, November 20, 2007. The banners reads “All together”. REUTERS/Pascal Rossignol 

2 comments

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/

So who will the unions hold hostage when the world stops buying their overpriced products? Time is also NOT on the side of those who would rule by coercion and intimidation.

Posted by OneOfTheSheep | Report as abusive

Since there are no UK laws to stop Directors not paying staff, the only alternative would be what happened at Medi-Vial. http://www.medi-vial.com/

Posted by CSIA | Report as abusive