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What should we think of the reform of the Labour Code defended by the government? The key measure, and also the one which is most highly criticized, consists in capping the compensation payments for unfair dismissal at one month’s salary per annum per year of seniority (and half a month for each year worked beyond 10 years). In other words, an employer can freely dismiss an employee who has spent over 10 years in the firm, without having to establish the slightest «real and serious cause» ; and without the judge being able to impose on the employer the payment of an indemnity greater than 10 month’s salary. The compensation for an employee who has been with the firm for 30 years cannot exceed 20 months’ salary.
The problem is that the social cost of dismissal, in terms of the payment of unemployment benefits and reclassification, is often much higher. Intended to strengthen recruitment incentives, this amounts to a licence to lay workers off and may well increase the arbitrary power of the employer, developing a feeling of distrust which is not conducive to long-term investment by employees. It may also increase the complaints for harassment or discrimination (which are not capped). It would have been more useful to speed up the judicial procedures and practice which are disgracefully slow in France.
What is really to be regretted is that the government has not even taken this opportunity to strengthen the involvement of the employees in the governance of firms. In particular, the reform would have been much more balanced if at the same time it had been decided to appreciably increase the number of seats for employees on the executive boards of companies, as the CFDT (Conféderation française de travail – one of the main trade unions) requested. This would have enabled the promotion of a genuine European model for economic democracy.
Let’s go back for a moment. Sometimes people think that the rules defining the power of shareholders and employees in joint-stock companies were fixed for once and for all in the 19th century: one share, one vote and that’s it! In reality, this is not true. In the 1950s, the Nordic and German-speaking countries adopted legislation which completely changed this balance. The stated aim was to promote ‘codetermination’, that is genuine power sharing between capital and labour. These rules were consolidated over the decades. At the moment, the employees’ representatives thus hold half of the seats on the executive boards of the major firms in Germany and one-third of these seats in Sweden, independently of any capital shareholding. There is a very broad consensus over the fact that these rules have contributed to an improvement in the involvement of the employees in the strategies of German and Swedish firms and, in the last resort, to greater economic and social efficiency.
Unfortunately until recently this movement towards democratisation has not been adopted by other countries to the extent that one might have imagined. In particular, the role of workers has long been purely consultative in French, British and American firms. In 2014 for the first time, a French law attributed one seat with a decision-making vote to the representatives of the employees on the executive board of companies (one seat in twelve, which remains very low). In the United States and the United Kingdom, shareholders still hold all the seats, even if the debate is becoming increasingly pressing in the UK, driven by the Labour Party, but also by some Conservatives.
Against this background if the French government were to decide to broaden the scope of the movement by introducing an appreciable number of seats for employees (let’s say, between one-third and one-half, so as to converge with the Germano-Nordic axis) this would be a major achievement. It would enable the promotion of a world-wide standard in corporate law and would, in more general terms, contribute to defining a genuine European doctrine in the economic and social sphere. This would be infinitely more interesting and imaginative than the sacrosanct consecration of the principle of free and fair competition characteristic of the European Union.
Recent work by European researchers has also demonstrated that consideration of the Germano-Nordic form of codetermination was far from finished and that this model could even go further and be improved. To get away from these role plays between workers and shareholders which are at times not very fruitful, Ewan McGaughey has suggested that the members of executive boards should be elected by a mix of shareholders and employees. This would thus lead to defending programmes for action combining multiple aspirations. Isabelle Ferreras for her part has defended the idea of genuine bicameralism in firms with shareholders’ councils and worker’s councils being obliged to agree and to adopt the same strategic texts and decisions. Julia Cagé has suggested that the voting rights of hegemonic shareholders should be capped and conversely, that those of the small shareholders and other ‘crowdfunders’ should be raised by the same amount. This model, originally intended for not-for-profit media firms, is based on a non-proportional relation between input in capital and voting rights and could be extended to other sectors.
All these studies have one thing in common: they demonstrate that reflection on power relationships and property, which for a moment was thought to have been annihilated after the Soviet disaster, in reality is only beginning. Europe and France must take their rightful place.