French law designed to increase multinational power

Here is an article that shows well how the laws are not voted in order to serve the majority but by the will of the minority, for a minority.  The El Khomri law is being pushed by the union that represents the multinationals, MEDEF (Movement of Enterprises of France) and is likely to be adopted soon, thanks to their intense lobbying, exclusively to their advantage.

In fact this law makes the problem worse. It neglects small businesses and artisans in favor of the stock market.  If this law passes, the multinationals will be able to retrieve the last of the social benefits, which specifically still protects French workers against big businesses.

Here is an example of a SME owner who is against the law.

Introduction by Olivier Fersancourt

Article by ARNAUD LELACHE, published on 20/04/2016 on :

SME’s do not need the El Khomri law (a boss says so)

The El Khomri law is at its best, useless and at worst, harmful to a Small/Medium Enterprise (SME) like mine.  I run a small business with 80 employees.  We develop software under free licenses and offer services to local authorities to implement these programs.  My company has existed since 1981 and has seen good times and difficult times.  Our main asset is our employees who have acquired the culture of the enterprise, who have mastered our technologies and know the needs of our clients.

El Khomri law is based on two axes: facilitate dismissals in case of temporary difficulties and reverse the hierarchy of norms (1).  A SME going through a difficult period, would not need assistance to issue layoffs, but help to keep its staff and to maintain its cash flow afloat.

Keeping talents

During difficult times is when it’s most important for a company to maintain the skills and competence of its employees and limit the impact of temporary cash flow problems on their motivation, if we want to bounce back as quickly as possible. For an SME, recruitment is a long and expensive process.  Our turnover is low, which means that there is no significant flow of employees who leave and come every year.  Therefore, the integration of each new person is a long process. If during a period of crisis, we are forced to lay off, we would need several years to rebound from that, because having to deprive the company of competent staff is an aggravating factor.

Parties like Nouvelle Donne (2) offer solutions that seem most appropriate to me.  They are inspired by the German Kurzarbeit or the Canadian Work-Sharing agreement. These mechanisms allow companies in difficulty to temporarily reduce the working time of teams in order to avoid layoffs. Time not worked is supported by unemployment insurance, which helps maintain the purchasing power of employees.  As soon as activity recovers, the company can give teams back their normal working time. Everyone wins, the company retains the skills, employees retain their income and their work, and the community does not have to deal with new cases unemployment.

The reversal of the hierarchy of norms also seems dangerous to me. In a period of high unemployment and pressure to lower production costs in all sectors, it will introduce a new form of competition between firms. Those who have high power over their employees will practice social dumping, which will give them a lasting competitive advantage over their competitors.

The “genius” of this law is to bring in to the sectors that are not yet exposed to international competition, the “social” advantage which those exposed to competing with developing countries or Eastern Europe, have already suffered. I think these are large companies that have substantial legal services, and will use that to their advantage, but at the expense of SME’s.

Liquidity facilities and payment delays

To reinforce the financial strength of SMEs, l’Urssaf (Organizations for the payment of social security and family benefit contributions) should first of all, grant liquidity facilities without formalities, if necessary. It would also force governments and corporations to honor their loans for SMEs. Local authorities and the state should in theory pay interest automatically in the event of late payment. In practice, they almost never do. As for the late payment of large companies toward SMEs, they total 16 billion euros. A labor law that cares for SMEs should address these priority issues.

Business executives will invest and create jobs if they think their products and services will find creditworthy customers. This implies that the purchasing power of consumers is safeguarded and that investment and operating budgets of public purchasers are sustainable. The signals sent forth by this government and previous governments does not make me particularly optimistic.

Lelache Arnaud, CEO of the French Agency Informatique (AFI)

Translated by Jillian Fersancourt
  1. Hierarchy of norms supposes, in a downward logic, that the law imposes on the industry agreement and the company agreement. A company agreement may derogate from a branch agreement or common law if it is more favorable, under the principle of favor. The reversal of the hierarchy of norms allows a company agreement to waive a sector agreement – as it may depart from the code of work – even if its content is lowest bidder.
  2. Including the author of this forum is a member.