People's Democracy

(Weekly Organ of the Communist Party of India (Marxist)

Vol. XXX

No. 21

May 21, 2006

Are Advocates Of Neo-liberal Reforms Listening?


Byasdeb Dasgupta


I WAS in Paris during the recent agitation against labour law reforms, which was fought and won by French students along with the workers. For quite some time now, the post-war welfare state has been on the retreat in France as in many other nations in Europe, giving way to neo-liberal politics and economics. However, this is for the first time that a massive student movement erupted against the neo-liberal reforms.


It started with the proposed First Employment Contract (Contract Premiere Embauche in French) or CPE, meant to introduce a flexible hire and fire regime for the young workers entering the job market. It was argued by the French government that this move would encourage firms to hire more young workers and thus solve the problem of youth unemployment in France, which has been steadily rising over the past two decades. If the employee sought judicial recourse against arbitrary firing, the burden of proof would have to be borne by her rather than the employer. Other measures to change labour laws contained in the “Statute on the Equality of Opportunities”, which was masterminded by the French prime minister Dominique de Villepin after the civic unrest in France in November 2005, were also proposed. They were, allowing apprenticeships from as early as 14 years age (before completion of school education, night work from the age of 15 (instead of 16) and suspension of certain type of welfare measures when students skip schools. The last measure has been in the programme of the far-right Front National for quite some time. Its endorsement by the French government was seen as a concession to the far-right.


The proposed legislation met stiff resistance from students, trade unions, and Left-wing activists, sparking protests in February and March with hundreds of thousands of participants in over 180 cities and towns across France. On March 30, the Constitutional Council (Conseil Constitutionnel in French), the highest constitutional authority, validated most of the law along with its 8th article instituting the CPE saying that it was “not unreasonable”. However, the Constitutional Council did not pronounce on the question of its conformity to international and European law. The sixty Socialist deputies and sixty Socialist senators who had deposed before the Council had notably claimed that the law was against the International Labour Convention.


Faced with countrywide protests, the French government had to give in. After standing firm for three months, prime minister Villepin ultimately declared CPE null and void. It was replaced by a law, which would encourage employers to recruit young unskilled workers on a permanent basis by subsidising them. The subsidy amount, estimated to be around 300 million euros, would be financed by imposing additional taxes on tobacco. The victory of the students and the trade unions on the CPE was indeed a significant one. Not only has it rejuvenated the student and working class movement in France, which would no doubt have tremendous impact domestically on the presidential elections of 2007; it has also shown to the world that determined opposition to neoliberal policies is not only possible but can also succeed in reversing them if people are united.


The neo-liberal logic for labour market flexibility is based upon a fallacious notion that introducing ‘hire and fire’ would lead to enhanced employment. It is fallacious because unemployment is not caused by ‘labour market rigidities’ as the supply-side economists would argue. The cause for involuntary unemployment, as was pointed by Keynes and Kalecki in the aftermath of the Great Depression, was insufficient aggregate demand, which is bound to afflict a market economy. The only way out of it is demand management by the state. It was this basic truth that was upheld by the French students and workers when they said NO to the CPE. Are the advocates of neo-liberal labour reforms in India listening?