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

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Case Details:

Case Code : BENV004
Case Length : 16 Pages
Period : 1991-2006
Pub Date : 2006
Teaching Note :Not Available
Organization : French Government, Labor Union
Industry : Labor
Countries : France

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Introduction Contd...

The French Prime Minister Dominique de Villepin (Villepin) supported by Chirac, had argued that the CPE would enable young people to find jobs more easily, and, at the same time, make it easier for the employers to dismiss them if they were found unsuitable.

After scrapping of the CPE, students and labor union leaders declared victory and thousands of opponents of the CPE held victory marches all over France. In contrast to the jubilant atmosphere among the protestors, there was despair among business entrepreneurs. Laurence Parisot, the President of 'Medef'6 said that the withdrawal of the CPE had shaken business confidence.

Commenting on the victory declerations by unions, she said, "They were wrong to see this as a victory. After victories like this, we will all become losers."7

Background Note

The welfare state8 in Europe has developed and evolved over several decades. It could be traced back to the introduction of social insurance programs in Germany in the late 19th century. Otto von Bismarck9 introduced health insurance for workers in 1883.

This was followed by accident insurance in 1884, while old age pensions and disability insurance were introduced in 1889. Later, in the late 19th and early 20th centuries, the development of trade unions and leftist movements in Europe strengthened the bargaining power of workers in dealing with managements.

The labor unions also had strong support from certain mainstream political parties (which were popular enough to form governments as well) and so workers were an important segment of the electorate and had strong political representation.

Excerpts >>

6] Medef stands for Mouvement des Entreprises de France in French. It means 'Movement of the French Enterprises' and is the largest union of employers in France.

7] "Update 4-Hundreds of Paris Students Hold Victory March,", April 11, 2006.

8] A welfare state is a social model in which the state assumes the primary responsibility for the welfare of its citizens by implementing programs in public health, public housing, pensions and unemployment compensation.

9] Otto von Bismarck was a prominent German statesman of the late 19th century. He unified the various German kingdoms into a single nation Germany.


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