Summary:
– Following the vote on the Macron bill by the National Assembly on February 19 and then by the Senate on May 12, a joint committee (CMP) will have to agree on a common text on June 3.
– Sometimes accused by its detractors of being a « catch-all » bill, its aim is to boost French growth by legislating on a wide range of areas, including Sunday working, regulated professions, coach transport, driving licenses, labor courts, the powers of the Competition Authority, social plans, etc.
– As this bill has been hotly debated (culminating in the 49-3 vote) and is very comprehensive, with 627 amendments adopted during the legislative process, it seems useful to summarize the main measures currently retained and their expected impact on the economy before the Joint Committee’s decision.
On May 12, the Senate adopted the bill on growth, activity, and equal economic opportunity, » better known as the Macron bill. After 133 hours of debate in plenary session, including 111 in the National Assembly, the text will go before the Joint Committee (CMP) on June 3, which is responsible for reconciling the two assemblies.
This law was originally born out of the ambition of the previous Minister of Economy, Industrial Recovery and Digital Affairs, Arnaud Montebourg (« law on growth and purchasing power »), to » restore €6 billion in purchasing power to the French people. » He proposed savings based on a three-thirds rule: reducing the public deficit, lowering compulsory levies on businesses, and reducing the tax burden on households. The Macron law now focuses on restoring competitiveness, with the aim of combating three « diseases » in France: mistrust, the complexity of laws and regulations, and corporatism.
Supporters of the bill insist on the need to stimulate growth by removing a number of rigidities, particularly with regard to Sunday working and regulated professions. Its detractors, on the other hand, denounce it as a » catch-all » law, since the Macron law deals with a wide variety of issues, and consider it to be inadequate to meet the current challenges of reviving the country’s economy.
The main measures that have currently been voted on by both chambers are summarized here in simplified form and as they stand in the legislative process, bearing in mind that a number of them are still likely to be rejected by the joint committee.
Sunday and night work:
The Senate has adopted the principle of 12 Sundays per year when shops can open, compared to 5 previously, extending this to include cultural goods retailers. A simple decision by the mayor, after consultation with the municipal council, is sufficient for up to 5 Sundays. Beyond that, the approval of the inter-municipal authority is also required. Shops are also authorized to open on Sundays in tourist areas and commercial areas designated by decree, as well as in the evening until midnight in international tourist areas (ZTI). Employees must receive higher compensation on Sundays than on other days of the week, with the possibility of using group agreements to define compensation. Finally, it should be added that the Senate has chosen to exempt companies with fewer than 11 employees from part of the compensation.
Objectives and desired impacts[1]:
For consumers: greater availability of stores, adapting to the rapid growth of new emerging customer bases.
For businesses: simplification of procedures and increased turnover (estimated at €150 million for department stores).
Regulated professions:
According to the conclusions of a 2013 public report by the IGF, regulated professions have a net pre-tax profit representing 19.2% of revenue, which is 2.4 times higher than in the rest of the economy. While this finding alone did not lead the government to seek to introduce more competition and lower prices, it was one of the arguments used. On the other hand, the proposed reform of regulated professions has been strongly criticized by the High Council of Notaries, which cites a study by EY estimating that 1,000 jobs could be lost and turnover could fall by 10 to 20% over five years.
The law first envisages further liberalizing the establishment of new bailiffs, notaries, and auctioneers in areas where the opening of offices is deemed necessary according to a map drawn up by the Ministry of Justice. The main concern of professionals on this subject has been the fear of a breach of equality between newcomers who could set up shop without any fees and those already in place. The bill no longer requires a notary to be introduced to the Minister of Justice by another notary. A notary will no longer be able to authorize clerks 12 months after the law is enacted. Sworn clerks will no longer be able to receive certain deeds on behalf of the notary, which should result in an increase in the number of notaries. The tariff corridor mechanism, which was intended to regulate the profession’s fees around a reference threshold, was abandoned by Emmanuel Macron, who said he » did not see the adverse effect that this measure could have. » Ultimately, in the version voted by the National Assembly, the simplest deeds will remain at fixed prices. Notaries will be able to offer discounts on fees charged on some real estate sales, applied to transactions whose price falls within a new fee range, defined by regulation. The Macron law also includes the opening up of minority share capital in law firms (SEL) to third parties, excluding banks and insurance companies, and the creation of a status for lawyers employed by companies. Finally, commercial court registries, which were previously subject to a fee, will now be freely accessible on Open Data, which has raised concerns about the future of auctioneers, administrators, and judicial agents.
Objectives and desired impacts:
To bring regulated tariffs into line with costs and increase the purchasing power of consumers[2], who will benefit from a wider range of professional services.
Increase competition to encourage operators to introduce new price regulations and innovative service offerings.
Enable more graduates to set up their own businesses.
Facilitate access to all sources of financing and strengthen international openness.
Coach transport:
This will now be liberalized. However, certain routes may be prohibited or restricted by regions and departments. New routes shorter than 200 km will require authorization, which is 100 km more than the threshold chosen by members of parliament. Finally, the Regulatory Authority for Rail and Road Activities (ARAFER) will have expanded powers. It will be able to control toll rates, increase competition in the motorway market, and give its opinion on national bus routes.
Objectives and desired impacts:
Enable low-income households to travel more easily, with an estimated gain in purchasing power of €800 million per year;
Create « tens of thousands of jobs »;
Impact on safety and the environment (development of public transport).
Driver’s license:
In some departments, the time it takes to obtain a license can be up to 200 days between two exams, with an average wait of 98 days in 2013 nationwide. The bill aims to reduce this period to 45 days by allowing public officials such as former police officers, retired military personnel, and postal workers to take the practical exam, provided they have undergone prior training. Driving schools will no longer be able to charge exam fees, with the exception of accompanying fees limited to the cost of one hour of driving instruction. Finally, the highway code tests will be entrusted to private companies.
Objectives and desired impacts:
To increase the number of exam places available, reduce waiting times for driving tests and thus help to reduce their cost (each month of waiting time saved represents an average saving of €200);
€250,000 in savings for the State on the organization of the theory test by the private sector.
Labor courts:
The aim of the law is to simplify procedures in order to reduce delays, by introducing training for advisors, sanctions for breaches of professional ethics, and a union representative status to support employees. The law will encourage closed-door hearings in order to shorten the time taken to reach judgments. Finally, a guideline scale for the compensation to be awarded to employees in the event of dismissal without real or serious cause will be introduced, based on several parameters.
Objectives and desired impacts:
Simplify procedures, strengthen ethics, shorten delays, and reduce workloads.
Increased powers for the competition authority:
To encourage competition in distribution and retail, the competition authority will be able to review urban planning documents (local urban planning plans, regional land use plans, etc.) to ensure they are not overly restrictive, but its opinion will only be sought at the request of the prefect or minister. It should have the power to issue injunctions to prevent abuse of dominant positions in areas where commercial diversity is too low by requiring price reductions. It will be able to act on the amount of antitrust penalties and obtain communication records for cartel investigations.
Objectives and desired impacts:
Preserve the principles of freedom of establishment and competition, allow new entrants to enter the market;
Accelerate the implementation of commercial projects, productivity gains, and job creation.
Social plans:
These will specify the criteria for unilateral dismissal and emphasize collective bargaining. In addition, under the Labor Code, a social plan must currently be proportionate to « the resources available to the company, the economic unit, and the group. » However, the courts do not have the legal tools to make the parent company pay, and when the social plan is canceled, employees may find themselves without wages or compensation. To remedy this situation, the bill does not seek to make the group pay, but rather to make the employment protection plan (PSE) proportionate.[3]to the company’s resources.
Objectives and desired impacts:
To provide a more secure legal framework, particularly with regard to guarantees for employees.
Other measures:
Many other areas are affected by the Macron law, such as employee savings and private share ownership (see the BSI Economics article of May 14, 2015), and the sale of assets, with the government selling €5-10 billion worth of corporate assets. A professional card for the construction industry is to be introduced to limit fraud and undeclared work. In addition, companies with surplus cash flow will be able to lend money to suppliers or subcontractors in difficulty.
Finally, other amendments voted by the Senate are worth noting. Following criticism by employers of the hardship account included in the 2014 pension reform, the Senate decided to remove the individual record tracking each employee’s exposure to hardship factors, the number of which has been reduced to three: night work, shift work, and work in hyperbaric environments[4]. It should be noted, however, that it is highly unlikely that the joint committee will approve this amendment. The Senate also chose to relax job retention agreements in order to develop internal flexibility and allow, according to Les Echos, allow healthy companies to derogate from the 35-hour week. Senators have also chosen to reinstate the three-day waiting period for civil servants[5]and authorized the sale of corrective lenses without a prescription[6]. The Senate unanimously voted to regulate search engines, including Google. Finally, it is worth noting the adoption of a new » revision leave credit » that will allow students who work during their studies to be credited with five additional days of leave per academic semester, whether they are full-time or part-time students. However, this leave will be unpaid following the adoption of a counter-amendment, although the issue may be re-discussed by the joint committee.
Conclusion
The debate is likely to be intense in the joint committee, composed of seven deputies and seven senators. The text was deemed too liberal by many « rebellious » deputies during the vote in the National Assembly, while the Senate, with its right-wing majority, chose to liberalize it further (in particular by making employment maintenance agreements more flexible, simplifying the hardship account, and extending Sunday work).
If the Joint Committee fails, each chamber will re-examine the text, and the National Assembly will have the final say. It will therefore be interesting to continue to follow the progress of the bill until its enactment.
Sources:
http://www.assemblee-nationale.fr/14/projets/pl2447-ei.asp
http://www.monde-diplomatique.fr/2015/04/BULARD/52833
Notes:
(1) All of these objectives anddesiredimpactscomefrom the impact study of the bill: http://www.assemblee-nationale.fr/14/projets/pl2447-ei.asp
(2) Not yet quantified in the impact analysis
(3) Another name for the social plan
(4) when the pressure is higher than atmospheric pressure
(5) Which had been repealed in the 2014 Finance Bill, making acceptance by the Joint Committee unlikely
(6) According to the amendment, » France is the only country in the European Union that refuses to sell a pair of glasses to a Chinese or American customer who has broken theirs. »
