Though it owed much to the scandal that engulfed the centre-right candidate Fillon when he looked on course to comfortably win the Presidency, and rested on a relatively modest first round score of 23.7%, Macron’s eventual victory over far-right candidate Marine Le Pen in the election run-off was decisive. Coupled with his new party’s comfortable majority secured in Parliamentary elections, a strong mandate for reform had been obtained. Following an explicit sequencing (Gouvernement Français 2017), overhauling the complex and restrictive labour code (‘renovating our labour law’) was the President’s first priority, with UI and training reform to follow. Labour law reform was highly symbolic for Macron, given its polarising potential and the difficulties the outgoing Socialist administration had encountered in this area. As such it was essential for him to keep the reformist unions onside, which helps understand why some backsliding on his broader programmatic commitments quickly became evident, including in the area of UI. Barely a week after the second round of the Presidential elections the leader of the largest trade union confederation noted that the language of ‘tripartism’ had replaced that of ‘nationalisation’ in relation to UI, and stated with confidence that “there is no question that [the social partners] will be excluded from defining the rules and from the management of UI” (Laurent Berger quoted in de Comarmond 2017).
With a series of decrees reforming the labour market quickly and relatively painlessly adopted, attention turned after the summer of 2017 to UI. Ahead of a much-delayed multilateral meeting with the government, all the social partners—the five union confederations and three employer organisations recognised as nationally representative—took the extremely rare step of publishing a jointly authored document, elaborated in the bipartite political group (groupe politique paritaire) of the UI institution. In this they emphasised their “on the ground knowledge of the functioning of the labour market” and “responsible management of the [UI] system” (Unédic 2017: 1). Their document stated pointedly that “any change in UI must build on the basis constituted by the current functioning of the system”, and recalled some of its core characteristics (an insurance-based system that protects the income level of each worker; that is guided by principles of inter-professional solidarity; that is based on contributions paid by workers and their employers, independently of unemployment risks etc.) (ibid: 9). Finally, the document expressed their wish that following the discussions to arrive at a shared diagnosis of problems and identify agreed objectives, any changes to the system should be freely negotiated between the social partners.
Faced with this united front, the government felt obliged to ask the social partners to try to negotiate agreements on the key UI ‘universalisation’ measures that had been included in Macron’s programme, as well as on the introduction of an experience rating mechanism (bonus-malus) in UI to discourage the use of short fixed-term contracts, another high-profile election pledge. On all points, the agreement reached in early 2018 diverged significantly from the spirit and ambition of the original proposals. With respect to covering the self-employed, the social partners emphasised both the technical complexity of the issue and the legal risks arising from potential unequal treatment of contributors, concluding therefore that any benefit should be organised outside, and not cross-subsidised by, the main contributory UI system. Regarding job quitters, they proposed highly restrictive eligibility criteria which would limit potential beneficiaries to 14,000–23,000 cases per year for a cost of at most €330 million, a fifth of what had been costed in Macron’s programme. The government wanted a benefit that would be easier to access but with the level and duration capped to keep the costs in check, something the social partners refused as “opening a Pandora’s box that would lead to an English-style system of flat-rate benefits” (Ruello 2018). Finally, instead of introducing experience rating the social partners eventually agreed that sectoral-level negotiations in the industries most affected by precarious work should try to find tailored ways of stemming it. Though the agreement was universally acknowledged as thin, the government—again—felt obliged to follow the recommendations on nearly all points, largely for reasons of social peace (Belouezzane 2018).
On the EU level, the reform of the European directive governing the posting of workers had provided Macron with an early success, albeit only after concessions to secure Spanish and Portuguese approval. On the bigger prize of EMU reform, progress was, however, much more difficult. Macron strategically timed a major speech on Europe delivered at the Sorbonne for just after the German elections in September 2017, attempting to bear on coalition negotiations. But while the risk of the increasingly Eurosceptic liberals entering government failed to materialise, and the Social Democrats could force references on Eurozone reform into the agreement for a Grand Coalition, the underlying balance of political forces made it perilous for Chancellor Merkel to depart much from traditional German positions (Bulmer, this issue).
In June 2018, a joint Franco-German ‘roadmap’ for the Eurozone was published. Though Merkel appeared to cede to key French demands such as a dedicated Eurozone budget and a fiscal stabilisation mechanism, the declaration was largely symbolic and “full of language that leaves a lot of room for interpretation” (Stierle 2018). The German Chancellor nonetheless swiftly came under sustained attack from the conservative wing of her party (Robert 2018). Led by the Netherlands, ‘the frugals’ had also already signalled their opposition to significant EMU reform, and were skilled in hollowing out key features of the Franco-German proposals (Schoeller 2021). The European Council in December 2018 reached agreement on a ‘budgetary instrument’, but in insisting it be included in negotiations for the Multiannual Financial Framework (MFF) ensured that it would necessarily be very limited in scale (Schild 2020). It was to be directed to competitiveness and convergence, but given lack of agreement among member states there was no reference to any stabilisation function. Overall the outcome was well understood in France to be “very far from Emmanuel Macron’s original ambitions” (Ducourtieux 2018).
France’s leverage in European-level negotiations was not helped by Macron’s mounting difficulties domestically. Throughout 2018 his approval ratings fell steeply, and the idea that his government’s policies were ‘pro-rich’ became increasingly well entrenched. From October 2018 an online campaign against fuel tax increases escalated into a full-scale popular revolt, with successive weekends of disorder in French cities (Chamorel 2019). The so-called yellow vest movement cohered mainly around their open loathing of Macron, but had a loose agenda combining fiscal justice, reductions in inequality and direct democracy (ibid). More than 70% of French expressed sympathy for the movement, a level of support that remained stable until the President eventually announced a large package of concessions to the movement in mid-December (IFOP 2019). The measures—unveiled on the eve of the European Council—included scrapping some of the planned increases in fuel taxes, reversing the rise in the CSG for retired people with pensions below €2000 per month and increasing in-work benefits, for an overall cost of €8 to €10 billion. While they had the desired effect of reducing support for the yellow vests and providing a sharp boost to Macron’s approval ratings, these spending commitments, however, meant that France would again fail to meet the 3% budget deficit target in 2018, having managed this in 2017 for the first time in a decade. In Berlin and Brussels, this was inevitably seized upon as evidence Macron could not face down opposition to his domestic reform agenda. The German daily Die Welt ran a story titled “The President is making France into a new Italy” (Ducourtieux and Wieder 2018).
Restoring the credibility harmed by the pay-off to the yellow vests in turn intensified the government’s emphasis on the budgetary dimension of other ongoing reforms. By an amendment to the 2018 law that codified the (limited) UI universalisation measures the social partners had earlier agreed, the government forced an early revision of the main UI collective agreement which had originally been scheduled to run to 2020. Though the unions and employer associations were asked to begin negotiations, these were to take place with reference to objectives and financial parameters fixed by the government, a new procedure that sought to reconcile the government’s desire for enhanced control of UI and the social partners’ demand that their regulatory prerogatives be respected. The ‘framing letter’ sent to the social partners asked them to find €3 to €3.9 billion savings on UI in a three-year period, while also identifying a range of dysfunctions the negotiators were invited to correct (Gouvernement Français 2018). The government’s principal target was the possibility for some low earners to receive of UI benefits as a supplement to their wages, which was accused of locking people into precariousness. The focus of the government’s objective of combating precarious work had thus shifted decisively from the behaviour of firms to the behaviour of benefit claimants, justifying substantial cuts to, and therefore savings on, UI.
Though the social partners accepted the invitation to negotiate, an agreement ultimately proved impossible given the scale of savings required. In the summer of 2019 the government stepped in to introduce reforms by decree, the first time in nearly four decades that a UI reform had been unilaterally imposed by a French executive (Clegg 2021). Alongside the new entitlements for the self-employed and job quitters, a first set of cuts would take effect from November 2019, with the introduction of degressive UI benefit rates for high earners as well as increased minimum contribution requirements and much stricter rules on linked benefit spells (‘rechargeable rights’). A change to the basis for calculating the reference salary of UI claimants, reducing benefit levels especially for workers who cycle frequently between unemployment and short periods of work, was additionally scheduled for April 2020.
This was evidently a far cry from the universalisation of UI. The impact analysis of the reforms (Unédic 2019) showed that while a maximum of 60,000 people would gain UI rights due to the new provisions for job quitters and the self-employed, more than 1.5 million would be negatively affected by the various benefit cuts. Overall, the changes were projected to produce more than €4.6 billion savings up to 2022 (ibid: 5). Only 7% of these would result from the introduction of degressive benefits for higher earners, with the bulk due to stricter contribution conditions (48%) and the new benefit rate calculation formula (45%), measures which would disproportionately impact the young, low earners and the precariously employed. The changes implemented thus did little to alter the insurance character of the French UI system, but they did make it significantly less inclusive. And though the government’s reform on paper delivered on Macron’s campaign pledge to penalise employers making heavy use of fixed-term contracts, following intense lobbying by businesses the experience rating system introduced was distinctly toothless, with a symbolic rate of variation that would apply only to companies with more than 11 employees in 7 selected sectors, and not before March 2021 (Freyssinet 2019: 8).