Austerity and social dialogue France

Brussels meeting February 2013Gilles Jeannot, Ecole des ponts

Paul Emmanuel Grimonprez Ministry of interior

National austerity measureswages

• “point” has grown to 2,8% for 2008-2011 for a 4,4% inflation. – Specific compensation against loss : 56 000

public servants received on average 800 Euros

– Half of the gain from staff cutback redistributed (salary grids, overtime)

• Global salary : plus 2,9 % in 2009-2010.• Bonus salary based on job level and

efficiency

National austerity measures : staff cutback

• Non replacement of one out of two retirees

• -75 000 in 2008 , -45 000 in 2009 for State administration

• Simultaneously local government and hospital staff increase

National social dialogue and austerity

• The national dialogue on inflation adjustment “point” has been cut, compensated by a technical discussion on salary grids

• Zero discussion on large reorganisations (revision générale des politiques publiques) at a national level and limited scope for local discussions

Social dialogue reform (2010)

• New Trade union representation rules (all trade unions equal, elections held during one day only)

• A joint statement is recognised only if signed by Unions representing 50 % of the voters, Government is considered bound by the signed agreement.

• But Government keeps the choice between negotiation and unilateral regulation.

• More importance put on organisation (health, reorganisation) (basis for representation)

Local government public service

• Created in 1983, tension between an integrated model (communists) and a decentralised model (Deferre Marseille’s Mayor)… in fact real autonomy.

• At the national level general rules are designed for State civil service and then adapted for local government

• At the national level it is difficult to find local employer representatives (Mayor associations or Superior council representatives?)

Austerity in local governement

• Budget – restriction to come : 1,5 Billion 2014, 1,5 Billion 2015

for • Staff :

– net growth 140 000 over 10 years, – 75 % lowest level (catégorie C), – 9 over ten of them recruited informally

• Salary– 60 % of catégorie C earns private minimum salary

(SMIC) + local bonus– Very little salary increase– Result: stronger impact of salary freeze

National social dialogue for local authorities

• National social dialogue is mainly based on national exams (concours) and career grids but most recent recruitments have been made without national exams and salary increase mainly dictated by minimum salary increase.

• National social dialogue is mainly focussed on certain categories (firemen, policemen).

Saint Etienne

Case study : Saint EtienneFinancial situation

• Industrial city close to Lyon in decline (population declined 240 000 - > 175 000)

• The biggest debt per habitant among French cities (2158 Euros preceding Marseille and Lille).

• Junk loans resulting in a 150 million Euro loss for a 350 million Euro annual budget

Saint Etienne

• 2008 new Mayor (socialist) and austerity plan– + 9,5% on local taxes– Investment limitation– 1% maxi payroll growth with a “shift-age-technical

skills” of 3%)– Limited staff cutback (100).

• Reorganisation– Power concentration– Rationalisation of street level organisations

(swimming pools, street cleaning, police …)

Saint Etienne : social dialogue

• Formalised social dialogue procedures mixing direct and indirect dialogue

• Special attention to psychological risks

• Real dialogue and conflict on street level reorganisations

• Unease among medium managers

• Balanced impression: real confrontation but dissatisfaction

Case study conclusion

• Modernisation continues– End of customary rules– Customer-oriented organisations

• Formalised form of social dialogue (in these cities?) but a culture of conflict.

• Best practices : mix between indirect and direct participation, mix between habitant participation and social dialogue.

Conclusion 1 austerity measures : Lagged responses ?

• Staff cutback, wage freeze, and new retirement rules launched by ex-President Sarkozi are not completely linked to crisis but not “lagged responses”

• President Hollande expands the austerity measures (tax increase, local government restrictions, retirement wage freeze…)…

Conclusion 2 : social dialogue restriction resilience reconfiguration ?

• Austerity measures and reengineering in State

administration have not been discussed = restriction

• Contrasts with new rules set to give more legitimacy to social dialogue (2010 law) that have not really been used to deal with austerity measures = a lost opportunity for reconfiguration

• Vivid social dialogue in local municipalities in crisis and subject to direct accountability to electors = resilience

French civil service

• French civil service was organised in 1983 into three sections: State, local government, hospital.(5,3 million)– State civil service (2,4 million) (50 %

executives, managers “catégorie A”)– Local government (1,8 million) (76%, workers

“catégorie C”).– Hospitals (1,1 million)

• Civil servants are mainly on tenure (status)

Social dialogue

• National dialogue on wages – Global adjustment to inflation “point”: discussed in

media– Salary grid by corps: specialized– Bonus: secret

• National dialogue on rules (conseils supérieurs de la Fonction publique)

• Dialogue on personal questions (career, mobility) is more active than dialogue on organisation (health, re-organisations).

• Trade union competition (tension between corporatists and non corporatist Trade unions).

Trade unions

• 15 % membership ; 70 % participation election basis for official representation

• CGT (23,5 %) especially strong among workers in municipalities, ex “communist” Union, now open to negotiation

• Force ouvrière (17,6 %) corporatist, now confrontational

• CFDT (16,8 %) non corporatist, open to negotiation

• FSU (11,%) very strong among teachers• SUD (9,6 %) extreme left, confrontational

State public service (thousands)

Local government public service

Hospitals total Total employ-ment France

Public employ-ment %

1996 2413 1222 885 4521 23055 19,6

1998 2452 1266 904 4622 23780 19,4

2000 2484 1328 931 4744 25006 19,0

2002 2557 1417 973 4947 25439 19,4

2004 2567 1525 1038 5130 25516 20,1

2005 2568 1564 1052 5185 25705 20,2

2006 2560 1612 1056 5228 26012 20,1

2007 2498 1704 1073 5276 26364 20,0

2008 2422 1771 1085 5278 26238 20,1

2009 2392 1806 1100 5298 26007 20,4

Source : Rapport annuel de la Fonction publique 2010-2011 , p. 302.