Social partners agree common positionon collective bargaining reform

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In July 2001, four French trade union confederations and three employers' organisations agreed a 'common position' setting out their wishes for a reform of the rules governing collective bargaining. The central plank of this proposed reform is the introduction of the 'majority principle' , whereby company-level agreements would be valid only with the support of unions which together won a majority of votes at the most recent workplace elections of employee representatives. This common position came at the same time as the Prime Minister, Lionel Jospin, announced a government plan for the 'renovation' of industrial relations, to be implemented in consultation with the social partners.

On 16 July 2001, four trade union confederations - CFDT, CFE-CGC, CFTC and CGT-FO - and three employers organisations' - the Movement of French Enterprises (Mouvement des entreprises de France, MEDEF), the General Confederation of Small and Medium-sized Enterprises (Confédération générale des petites et moyennes entreprises, CGPME) and the Craftwork Employers' Association (Union professionnelle artisanale, UPA) - signed a 'common position on the ways and means of deepening collective bargaining'. Only one union confederation, CGT, declined to sign the text.

This deal came after 16 months of negotiations under the project aimed at 'overhauling' the French industrial relations system (FR0102134F), launched by MEDEF in late 1999 (FR9912122F). The 'industrial relations overhaul' talks have been conducted in eight separate working groups, and the collective bargaining reform document is the fourth accord to be struck in the groups, following the agreements on unemployment insurance (June 2000 - FR0101114F), workplace health (December 2000 - FR0101116N) and supplementary pensions (February 2001 - FR0103136N). CFDT, CFTC and CFE-CGC have signed all four agreements, while CGT has signed none. CGT-FO did not sign the three earlier texts, but did sign the common position on bargaining reform.

As was the case with the three previous agreements, negotiations over bargaining reform began around a document presented by MEDEF (FR0102134F). MEDEF sought to overturn the hierarchy of standards produced by collective bargaining, currently based on the 'favourability principle', which holds that company-level collective bargaining can only improve on the norms laid down by more centralised collective bargaining, and that the latter may only improve on the standards set out by legislation. The possibility of exemption from this principle is restricted to areas and conditions that are narrowly defined by law (basically in relation to the reduction of working time). The objective of MEDEF was to give agreements primacy over the law, and to afford sector-level agreements only a 'supplementary' (or subsidiary) role, whereby the latter would apply to a firm only if there were no company-level collective agreement. This goal fits into a pattern, seen over the past 20 years, of employers campaigning to prioritise company-level bargaining over the other levels at which terms and conditions of employment are agreed.

The content of the common position

Comparing the common position signed on 16 July 2001 with the objectives announced by MEDEF in March 2000 and given practical substance by the first proposed text which it floated in December 2000, it is striking how much ground has been conceded by the employers' confederation. Indeed, there are only a few remaining traces of the initial wording expressing the intention to overturn the hierarchy of collective bargaining. On the contrary, the document endorses compliance with the traditional hierarchy of employment standards, particularly the superiority of the legal provisions on 'public industrial relations order', followed by those standards set out in intersectoral, then sectoral collective agreements 'that their signatories have intended to assume normative and imperative value' (the common position explicitly guarantees the validity of the hierarchy of previously concluded agreements).

The document explicitly praises the intersectoral level of negotiation as the 'keystone' which 'ensures the coherence of the whole system'. It accords sector-level bargaining a role involving 'solidarity, providing a framework and driving forward company-level bargaining'. It is only 'on a case-by-case basis, to be determined by the negotiators', that an intersectoral or sectoral agreement could be restricted to only a guiding role for decentralised bargaining or leave an open field for company-level negotiations.

Moreover, the common position suggests that the government introduce into the French industrial relations system the European Union provisions for involving the social partners in the formulation and implementation of social and employment legislation, set out originally in the 'social chapter' of the Maastricht Treaty and now contained in Articles 137 and 138 of the European Community Treaty. This would consist of compelling the government, before taking any legislative initiative in the field of industrial relations, systematically to consult the social partners about its appropriateness, and then to allow them the right to regulate the topic through collective agreements within an agreed period. If such negotiations produce an agreement, it should be used as a model by the legislator 'in compliance with its internal balance'- ie without changing its content. Moreover, the common position suggests that the transcription of EU social Directives into national law should occur where possible by collective agreement and not, as is currently the case, exclusively through the adoption of legislation.

Generally, the common position advocates that an 'independent authority' should check that, in the industrial relations areas regulated both by the social partners and the state, the content of agreements does not infringe the 'public industrial relations order'. In a previous version of the text, MEDEF had suggested entrusting the Constitutional Council (Conseil constitutionnel) with this task, but the unions rejected this proposal.

In order to make company-level collective bargaining more widespread, two methods are put forward. First, employee representation in small and medium-sized enterprises should be strengthened. This passage in the document reflects a favourable response to a trade union demand, but its implementation is to be left to sectoral negotiations. As a trade-off, the document satisfies an employers' demand, by offering the opportunity for firms with no trade union delegates to negotiate, either with elected employee representatives (works councils or workforce delegates) or with an employee 'mandated' by one or more unions (FR9807123F), for a five-year trial period. It would be incumbent upon sector-level negotiations to choose the method for such bargaining in the absence of union delegates, and establish which themes may be negotiated in this way (currently, labour law allows agreements signed by mandated employees only in relation to the reduction of working time). Lastly, the common position grants unions the right to refer matters arising from sector and company-level collective bargaining to the courts, a right whose operational forms will be set by sectoral agreements.

Compromise on majority agreements

The major innovation contained in the document is the introduction of a 'majority principle' for the validation of collective agreements. The introduction of this concept has been motivated by the concern 'to bolster the legitimacy of agreements', and 'ensure that negotiations are balanced'. In the present system, an agreement's validity is conditional only on being signed by at least one of the five trade union organisations guaranteed an 'indisputable presumption' of their representative character by a 1966 decree (CFDT, CFE-CGC, CFTC, CGT and CGT-FO) (FR0006170F). The issue of signatory unions having to represent a majority of employees concerned arises only through the right for unions to oppose in the courts a 'minority' company-level agreement on working time which differs from statutory regulations in this area (granted by the 1982 'Auroux' laws) and also, more strongly defined, in relation to state-subsidised agreements on the reduction of working time, under the 1998 and 2001 'Aubry' laws on the introduction of the 35-hour week (FR0001137F).

Henceforth, the common position's signatories want extra conditions to be met so that a collective agreement may come into force. At sector level, the agreement, regardless of the number of signatories, should only take effect 'to the extent that the majority of unions with representative status have not availed of their right of opposition'. In relation to company-level agreements, the document proposes that sector-level agreements lay down one or other of the following two sets of rules on the validity of company agreements:

1. one or more trade unions with representative status, which together won at least 50% of the votes in the most recent workplace election of employee representatives on works councils or of workforce delegates, must sign the agreement. Failing that, the agreement must win the approval of the majority of the staff in a referendum; or

2. the agreement is valid in the absence of opposition by non-signatory unions with a combined vote of at least 50% at the most recent workplace elections.

If there is no sector-level agreement governing which rules to apply, company-level agreements may be reached in one of the two ways outlined above. This clause was added to the final version of the common position at the request of CFDT, not having featured in the text published on 7 July 2001, on which the employers' associations and the CGT-FO, CFTC and CFE-CGC union confederations had agreed. The renegotiation of this issue was highly sensitive, in that CGT-FO had been against the idea and even threatened, if the agreement was altered, to withdraw from the entire negotiation process on 'industrial relations overhaul'- some working parties of which have yet to complete their work.

CFDT finally accepted only minor changes before signing the agreement and abandoned the idea of establishing the same majority logic for all sector and company-level agreements. The most important point for CFDT was that the 'momentum' toward majority agreements had been built up. It was given comfort in this conviction by the formal assurance included in the document that the compromise found on majority agreements would be only a 'transitional' step. CFDT hopes that practical experience will change the stances of the various parties to the common position by providing a positive assessment of the new way of concluding company-level agreements.

CGT-FO agreed to the compromise and renounced its threat to leave the talks. Unlike CFDT, it places particular value on continuity and preserving a number of principles that the confederation has traditionally adamantly defended, especially the 'favourability principle' which holds that agreements at one level can only improve on the standards laid down at the level above. In CGT-FO's view, the reaffirmation of the principles of favourability and of union independence, make the majority legitimisation of all agreements superfluous, and it rejected such a logic, fearing exaggerated promises and the politicisation of inter-union electoral competition. These justifications are also shared by CFTC and CFE-CGC, which have fewer voters than the CGT-FO, and would be even more exposed to the risk of marginalisation if the majority principle were to be applied across the board. For its part, CGT withdrew from the negotiating process, announcing its refusal to participate in any 'common position' whatsoever with the employers' organisations.

Government plan to renovate industrial relations

For some time, the Prime Minister, Lionel Jospin, has himself been preparing an initiative aimed at 'updating' the system of industrial relations, in consultation with the trade unions and employers' associations. In the press, this forthcoming initiative was even heralded as a competitor of the employers' 'industrial relations overhaul' project.

It was ultimately in a letter dated 6 July 2001, sent to all the unions and employers' associations with representative status, that Mr Jospin drew together the outlines of his plan aimed at 'opening a new era in the relationship between the social partners and the government'. The Prime Minister focused on reassuring the social partners involved in the negotiations on collective bargaining then still underway in the framework of the 'industrial relations overhaul' process, stating that he was anxious to 'allow that process to go on independently', and that what it produced would 'certainly' be 'taken into account' by the consultation process he was announcing.

For the time being, the Prime Minister is keeping his cards very close to his chest in terms of the presentation of his objectives. He has stressed his willingness to listen to proposals from the social partners before putting together his own plan on industrial relations reform. This 'modesty' is also a reaction to the criticisms meted out to him by unions and employers' associations, which have complained of the government's 'heavy-handed attitude', and even its 'dirigisme' in the implementation of its industrial relations programme. In his letter, the Prime Minister again justified the 'state's role as a driving force' in this first phase of the government's action in this area by referring to the urgency of, and the 'absolute priority accorded to job creation'. Henceforth, this approach would go hand in hand with a 'robust and validated dialogue between those involved'.

Mr Jospin is not currently giving any indication as to the timetable or to the form that the social partners' input into the thinking through and preparation of these reforms will take. He has made the Minister for Employment and Solidarity, Elisabeth Guigou, responsible for drawing up a timetable after meeting each trade union and employers' association individually.

However, the Prime Minister has listed three areas for focused thinking - 'social democracy', social protection and a return to full employment. On the issue of 'social democracy', Mr Jospin has raised three practical matters: the funding of trade unions and employers' associations; the representation of employees in small businesses; and the role of employees in the economic decision-making process. The raising of the last-named issue indirectly echoes an examination initiated by the Minister for Employment and Solidarity on the possible representation of employee representatives on company boards and supervisory councils, with a decision-making vote (similar to the German model of 'co-determination') (TN9809201S).'

In terms of social protection, the Prime Minister's letter refers in part to the recent meeting on the future of the healthcare system, which brought together the social partners on 12 July 2001 to debate the reform of the system regulating private medical practice (FR0108159F). It also mentions the clarification of the roles of the state and the boards of the jointly-managed sickness insurance funds, thus referring to the announcement made by MEDEF that it wants to withdraw from these boards (FR0107167N).

The responses of the social partners to the Prime Minister's letter were positive, and all the recipients accepted the invitation to meet with Ms Guigou. In his reply, the president of MEDEF, Ernest-Antoine Seillière, welcomed this return to consultation in industrial relations 'which puts an end to four years without normal relations'. However, as a prerequisite for the resumption of genuinely smooth relations with the government, MEDEF has set two conditions: first, that the government stop using social security funds to finance the current reduction of working time (FR9910112F); and second, that the application of the law on the 35-hour week be made more flexible or even 'postponed if not repealed' in the case of small businesses (FR0101117N).

Ms Guigou promised to consider reducing the amount levied on social security funds to finance working time reductions in 2002. CGT has stated its readiness to take over from MEDEF, including taking the chair of a social security fund, if MEDEF actually does pull out of the system of joint management by unions and employers. Generally, CGT is advocating a return to the election of employee representatives on the boards of these funds, a stance which is not shared by the other unions.

Some commentators on the Prime Minister's initiative have talked of a renaissance of the 'second Left', a term that in France refers to a trend in left-wing politics and trade unionism which, in contrast to the Jacobin tradition of state intervention, seeks to prioritise intermediary bodies and consultation with civil society. Moreover, as a preliminary to preparing his initiative, Mr Jospin had held bilateral consultations with all the trade unions and employers' organisations with representative status. Those close to the Prime Minister are said to be ready to borrow from the initiative taken by Germany's Social Democratic Chancellor, Gerhard Schröder, which involves permanent consultation with the social partners around a tripartite national 'Alliance for Jobs' (DE9812286N). The CFDT general secretary, Nicole Notat, has also asked the Prime Minister to hold a tripartite round table on the conditions required for a return to full employment.

Aspects of this type of thinking can be found in the 'Project 2001' document currently being prepared by the Socialist Party (Parti Socialiste) for its candidate in the presidential election to be held in spring 2002, who in all likelihood will be Mr Jospin. A provisional document entitled 'A new democratic ambition' has been written by an editorial group coordinated by the former employment minister, Martine Aubry. One element of this document relates to 'renovated social democracy', and has been discussed with the five trade union confederations with representative status. Among other matters, it provides that at the outset of the new parliamentary term (2002-7), the Prime Minister would issue invitations to a tripartite conference on pay and industrial relations, to be held annually, at which the state and the social partners would establish 'a genuinely complementary relationship between government action and collective bargaining'.

Commentary

The common position adopted by the social partners on the reform of the rules governing collective bargaining as part of their 'industrial relations overhaul' talks can be considered as a modest agreement, in terms of both its scope and its content. Originally planned by MEDEF as the crux of its plan to overhaul industrial relations, the collective bargaining reform issue made no progress for a long time. Two developments have helped to end this impasse:

• MEDEF's abandonment of its goal of overturning the traditional hierarchy of setting terms and conditions of employment and of establishing bargaining at 'relatively independent levels', insulated from state intervention; and

• the government's announcement of a tripartite consultation process with a view to overhauling social dialogue and establishing a new division of the respective responsibilities of the state and the social partners.

The negotiations on bargaining reform ended not in an agreement, as was the case for the earlier issues dealt with in the 'industrial relations overhaul' process, but in the formulation of a mere 'common position' to be implemented by either the government or the negotiators at sector level. The only innovation with immediate effect, albeit only for a 'transitional' period, is the introduction of the logic of majority support for company-level agreements. Although some signatories are opposed to this, its introduction is likely to generate irreversible momentum and entail greater reforms of the rules governing the representative status of unions and the ways in which collective agreements are concluded.

The premises of these reforms can be seen in the various initiatives and projects underway, particularly the Prime Minister's plan for 'renovating social dialogue' and the Socialist Party's 'renovated social democracy' project for the presidential election. Although they differ sometimes fundamentally from MEDEF's 'overhaul of industrial relations' project, these initiatives share a core objective, that of stimulating social dialogue and collective bargaining by establishing a new complementary relationship between the roles of the law and of collective bargaining, through a tripartite process of consultation. (Udo Rehfeldt, IRES)