Labor Market Reforms in France and the Job Law 'CPE' - A Lost Opportunity

After weeks of protests and demonstrations by students and workers, the French government, on April 10, 2006, withdrew the First Employment Contract (CPE)⁴, a law framed to allow employers to dismiss workers, under the age of 26, in the initial two years of their service, without providing any reason. The French President Jacques Chirac (Chirac) said that he had decided to replace the CPE with another set of measures that would boost employment opportunities for the French youth. In the same week, the French parliament passed a new proposal on "young people's access to employment in companies"which aimed at subsidizing firms hiring applicants under 26 who either had low qualification or were in an underprivileged situation.

The earlier legislation - the CPE - signed into law by the French President on April 02, 2006, drew widespread protests from millions of students and workers in France. There were several occasions when violence erupted, with anti-social elements vandalizing shops and clashing with the police.

The protests drew worldwide attention to the high rates of unemployment among French youth as well as the rigidity of the French labor market. The French labor market was highly regulated, with the state deciding the minimum wages and working hours, and making the firing of employees extremely difficult.