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France – Labour market overhaul could impact staffing firms

15 January 2013

Unions and employers last week struck a deal to overhaul the labour market in France, something which will also have important implications for the staffing industry in the country.

The labour agreement will pave the way for new legislation in 2013 and aims to increase flexibility, making it easier for employers to lay off staff.

Three of the five major unions represented at talks last week confirmed they would sign the deal formally this week. While two trade unions refrained from giving their approval, it takes a majority among the unions for the deal to go ahead.  

The agreement, regarded as a victory for President Francois Hollande, allows companies to cut wages and work time during a downturn. Legal procedures for layoffs have been simplified, putting a limit to the amount of time employees can dispute unfair dismissals from currently five years to 24 months.

Unions have won extended rights to healthcare benefits while employers will face increased charges for short-term fixed contracts. This, in effect, means that full-time fixed-term work will become more expensive. For short-term contracts lasting less than three months surcharges were also raised.

While some analysts said that the higher expense for using fixed-term-contracts (CDD) could benefit temporary staffing firms, it is yet unclear whether these changes will give a real advantage to staffing companies. The reforms, expected to be enforced in May 2013, could stimulate permanent recruitment or make temporary staffing opportunities more attractive as they fall into a separate category to fixed-term contracts.  

Critics said that the changes are unlikely to bring a quick fix to the job market as unemployment in the country is currently close to a 15-year high.

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Territoires Humains

Human Territories 15/01/2013 9:02 am

Indeed the agreement signed last week will increase the difference of cost between fixed term contracts and temporary work contracts since fixed term contracts of less than 1 to 3 months will see the level of unemployment charges increase from 0.5 to 3.0% while temporary work will not be submitted to higher unemployment charges. As a result, the competitive advantage of temporary work contracts will be higher. Also interesting to notice is the fact that the agreement opens the door for the private employment industry to negotiate the setting-up of open ended contracts which will be offered to candidates by Prea's. This means that Prea's will potentially be in a position to attract new candidates and assign them in a number of industries where they will be able to compete sectors such as the IT services, ingeniering, by offering a full range of labor contracts and services to their clients.


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