For decades, France has struggled with stagnant labor markets and intractably high unemployment. The jobless rate stands at 9.6 percent, which believe it or not is a five-year low.
Also for decades, French politicians have tried to reform the system. Macrons predecessor, François Hollande, suffered recordlow approval ratings, partly due to the violent strikes and chaos that erupted when he worked to reform labor laws last year.
Rather than shying away from this hot-button issue which Macron had overseen as Hollandes economy minister Macron made it a centerpiece of his presidential campaign. And after this Sundays first-round parliamentary elections, which his brand-new political party is projected to win in a landslide, his government will likely claim a public mandate to finally fix the system.
So what exactly is wrong with the job market in France?
The problem isnt generous health-care benefits or onerous environmental protections or the usual job-killing regulations that American politicians so often vilify and that the French love.
Its that its virtually impossible, or at the very least prohibitively expensive, to fire employees. Which makes hiring employees unattractive, too.
In France, firings and layoffs can generally happen under very limited circumstances, including gross negligence and economic reasons. Laid-off employees can then challenge their dismissals in court, where judges are seen as somewhat hostile to employers.
Judges, for example, have wide latitude in deciding what counts as a justifiable economic reason for a layoff. They may decide that multinational firms that are losing money in France are not allowed to pare back their French workforce if they are collectively profitable in other countries, according to Jean-Charles Simon, an economist and former manager of the countrys main employer organization, Mouvement des Entreprises de France, or MEDEF.
A layoff in such a case could be deemed unfair. Furthermore, there is no cap on the damages that judges can award for unfair dismissal, meaning employers potential risks are essentially limitless. The whole process can take years to resolve, too.
Unsurprisingly, employers turn whenever possible to temporary, short-term contract workers, who enjoy fewer protections. This has led to a two-tier labor market with ironclad job security for some and virtually none for the rest.
In fact, about two-thirds of job contracts signed each year are fixed-term arrangements lasting less than a month, according to Francis Kramarz, director of CREST (the Center for Research in Economics and Statistics) and professor at École Polytechnique and ENSAE. Young workers often find themselves doomed to an endless series of short-term gigs, with no opportunities for upward mobility.
In addition to job protections, other rigid policies have made France a difficult place to run a business, particularly for smaller firms.
Only about 8 percent of French workers belong to unions, but thanks to French labor law, 98 percent of workers are covered by national, industry-wide union-negotiated contracts. These can set generous and inflexible pay scales, overtime rates and severance packages, regardless of firm size, resources or whether any of its employees actually belong to a union.
Arguably this is one reason larger firms have not pushed harder for market reforms. They know how to work the system, have lawyers on staff and can absorb many of the steep costs that smaller firms cannot.