Far-reaching French labor reform plan fuels political tensions

PARIS (Reuters) - France’s government is preparing reforms that will put almost all aspects of the country’s strictly codified labor relations up for negotiation, but opposition within the ruling Socialist party means the plan is likely to be watered down.

French Labour Minister Myriam el Khomry attends the questions to the government session at the National Assembly in Paris, France, February 16, 2016. REUTERS/Charles Platiau

The 130-page draft bill seen by Reuters on Thursday marks President Francois Hollande’s most far-reaching attempt yet to make good on a promise to tackle a stubbornly high unemployment rate.

But by making it easier for employers to shed workers it risks widening already deep divisions within his ruling Socialist party as he gears up for a possible re-election bid in May 2017.

“The debate is going to be fierce because there is a change of philosophy,” Labor Minister Myriam El Khomri said in an interview with Les Echos business newspaper.

The aim of the reform, to be formally presented to the cabinet on March 9, was to align labor norms in France with those in other countries, she said.

“We want the country to progress through social dialogue while better guaranteeing rights and making companies more competitive.”

The reform, which would leave open to negotiation everything from maximum working hours to holidays and pay on rest breaks, drew praise from the head of the Medef employers federation Pierre Gattaz, who said the leaked draft “goes in the right direction”.

But figures on the left were critical.

The head of the hardline Force Ouvriere, Jean-Claude Mailly, said it went much further than expected.

Leftwing Socialist lawmaker Yann Galut promised a “Homeric battle” in parliament against the reforms, and even party head Jean-Christophe Cambadelis said he could not vote for the bill in its current form.

“Everything in this bill on layoffs for economic reasons is open for debate and will be debated,” Cambadelis said on BFM TV.

El Khomri did not rule out invoking a rarely used constitutional article allowing the government to bypass parliament, but she also said she would work with lawmakers which suggested some concessions are likely.

In a government reshuffle earlier last week, Hollande promised to keep reforming the euro zone’s second-biggest economy up to the end of his mandate.

Though a root-and-branch labor reform is politically risky, Hollande is desperate to make inroads into unemployment, currently at an 18-year high of 10.6 percent.

The ruling Socialists are already split over Hollande’s proposal to strip dual nationals of their French citizenship if convicted of terrorism.

Reporting by Emmanuel Jarry, Additional reporting by Myriam Rivet, Marine Pennetier and Leigh Thomas, writing by Leigh Thomas, editing by Alister Doyle and John Stonestreet