One in four youth unemployment figure disputed

Florence Lefresne
Florence Lefresne

Our interview with economist and European labour trends specialist Florence Lefresne about the CPE.

Submitted by alibi on March 27, 2006

In the interview Lefresne, of the Institute of Economic and Social Research, questions the widely reported one in four youth unemployment figures that have been used repeatedly as a justification for the CPE. Outside of France, the figure has been used when portraying France as a nation with chronic youth unemployment, desperately in need of labour market reform.

Our interview in full:

Unrest in France Blog: Thanks for joining us. We've seen the word 'precarite' in many of the articles about the CPE, and on banners at the demonstrations - how would you explain the meaning of this word?

Florence Lefresne: It is impossible to give a universal definition of “precarité” (being precarious). Its significance depends on the employment norm you refer to. In France, this norm is the CDI (unlimited contact) that includes a lot of collective rights for the workers and duties for the employers. Three of them are very important. The dismissal notice duty which was introduced into the labour law in 1958, the dismissal payment duty set in 1967, and the mandatory requirement for the employer to justify - ex ante - the dismissal with ‘genuine and serious cause’, introduced in 1973. This latter rule is removed with the CPE and CNE.

- UiFB: Would you say that the 'precarite' that is being resisted in France already exists in the UK?

FL: Yes, in a way, it already exists in the UK through the huge flexibility of the labour market even through the standard form of employment. The number of short-term contracts is low in the UK (6% of the jobs) because employers have enough flexibility with the permanent contract. “Precarité” could be translated by “bad jobs”, that means jobs with low wages, no sick leave, no pension beyond statutory entitlement, no promotion ladder (see Mc Govern, Smeaton and Hill 2002 study). Non-standard forms of employment (especially part time jobs) increase workers’ exposure to bad job characteristics.

-UiFB: We've read you say that the statistic of 22% youth unemployment is very misleading, or wrong. Can you explain this anomaly, and do you think that the use of this statistic, by the BBC for example, is factually incorrect?

FL: France is the EU member-state in which young people enter the labour market the latest, and their participation rate is the lowest (38%). In some way, the school system represents the first level of employment policy. Saying that one young person out of four is unemployed is completely wrong and can be seen as a kind of public opinion manipulation. The unemployment rate indicator (23%) is just as significant for those young people actually in the labour market. The proportion of young people unemployed is in fact 8% (0,23*0,38). Yet, it remains true that young people in the economically active category are 2.2 times as likely to be unemployed as the average.

Many people outside France cannot understand why it was the students who were protesting about this law, not understanding how it would affect them, why was this, and is it true to say that the movement against CPE grown beyond students to include all young people?

FL: Apart from the age criterion (under 26), the CPE is not targeted at any particular group. A young graduate may thus be recruited under this type of contract. The government maintains that it is a solution for unqualified young people but why didn’t it target it at this group? There is no guarantee that the employers still continue to use the normal permanent contract when they recruit young people. So the risk is clearly that this type of contract will replace the standard one.

-UiFB: Would it be inevitable that all jobs given to young people would eventually become CPE's or is that not possible?

FL: Legally, it is quite possible. But keep in mind that we have more than fifteen kinds of contract for young people (CDI + CDD + temporary contract + CNE + CPE + different subsidized contracts set by the public employment policy). The employers just choose what suits to them according to their specific needs.

-UiFB: It was also said that the students who protested at first were being selfish, that this law was to help the 'banlieue youth' and it was not right for them to block it, but now the banlieue youth are also opposing the law - do you believe there is any evidence that this law could in fact benefit them through job creation?

FL: If an employer has choice between an unqualified and a qualified young person, he will obviously choose the second one.

-UiFB: About the CPE, we've read that the employer would not even need to give a reason for dismissal, is this true?

FL: Yes, it is. The CPE is a special type of permanent contract which starts with a 2-year ‘consolidation period’, during which the contract can be terminated without justification. If this occurs, an employee who has been in his/her job for between one and six months must be given two week’s notice, and one month’s notice if more time has been served. The employee receives compensation worth 8% of the total gross wage paid since the beginning of the contract. If the employer had use a CDD he would have had to pay 10% of the total wage paid since the beginning + the total wage owed until the end of the fixed term. If he had use a CDI, it could have cost him 6 months of salary.

-UiFB: Do you think the CPE was genuinely Villepins response to the November riots, or was this an idea which had already existed?

FL: Villepin used the November riots as an argument for legitimising his new contract, but his goal is to deeply reform the French labour law in order to introduce more flexibility. The problem is that flexibility already exist through the growing part of CDD (CDD concerns 75% of new recruitments, and 13% of all jobs) and didn’t lead to increase the job creation…Only GDP growth creates jobs. Every serious economist knows that.

-UiFB: Can you explain the differences between the CNE and the CPE, and is there any evidence that the CNE, which has existed for some time now, has been a success?

FL: The CPE is an extension of the Contrat nouvelles embauches (CNE, New Recruitment Contract), provided for in the June 2005 Emergency Employment Plan and implemented by decree in summer 2005, to companies with more than 20 employees. The CPE has swollen the already large ranks of contracts exempt from standard labour law provisions, set up as part of youth job creation policy. The rise in use of the CNEs (350,000 recruitments) testifies to many terminated contracts and has generated a growing workload for the Conseil des prud’hommes (elected labour tribunal). It is above all the termination of contracts prior to the 24-month consolidation period that raises problems since common redundancy law is thus not being fully applied. There is no mandatory requirement for the employer to prove justification for the redundancy with ‘genuine and serious cause’, but the employee can go to law. In this case he (the employee) has to prove that the redundancy was unfair.

-UiFB: Has the CDD been generally accepted, or might the movement against the CPE soon demand the abolition of the CDD and CNE as well?

A lot of organizations involved in the movement against the CPE demand the abolition of the CNE as well. The PS (Socialist Party) promised to abolish both of them if it is elected in 2007. It is much more complicated to claim for removing the CDD because the CDD plays a specific role within the labour law, being limited to a temporary or seasonable piece of work. The problem is that most employers don’t respect this rule when they use it. The respect of the law should the best demand!

-UiFB: Finally, do you think Villepin can find a way out of this crisis without abolishing the law altogether? Can this law be amended in such a way?

FL: The CPE was carried out as an emergency legislative procedure involving a vote by Parliament without any prior debate, under the authority vested in the government by Article 49.3 of the Constitution, and without consultation with unions or employers’ associations. This method is part of the explanation why the unions, the political Parties (even UDF which belongs to the Parliament majority) reacted so vigorously. Chirac and Villepin already told that they won’t remove the CPE which is now voted. They try to propose light amendments and hope for internal divisions of the social movement. The Conseil constitutionnel (Constitutional council) is going to give a ruling on the law…If it rejects it, this could be a political way out for the government avoiding him to lose face. Anyway, the next demonstration planned for Tuesday 28th of March will be a determining factor of the power struggle assessment.

The Unrest in France Blog would like to thank Florence Lefresne for agreeing to take part in this interview.