French dismissal law has limited jobs impact

The new arrangements in France, permitting small employers to dismiss new staff (with less than two years’ service) without giving a reason, have had only a limited success in creating new jobs. This is one of the key findings of a survey published last month by DARES, the official research body of the French employment ministry.

The CNE, the contract for new recruits, was introduced in August 2005 and applies to employers with up to 20 employees. At the time the government argued that it would help create jobs (see Labour Research, September 2005).

DARES found that 440,000 workers were taken on under the CNE between August 2005 and March 2006, but this was only between 9% and 12% of all new employment in businesses employing 20 staff or fewer (the precise figures vary from month to month).

The research also found that 69% of employers who had recruited under the CNE said they would have done so anyway, even without the new legislation. A further 22% would have waited longer before recruiting, and only 9% said they would not have recruited at all.

Maryse Dumas of the CGT, one of France’s main union confederations, argues that the DARES results indicate a failure by the CNE to create jobs.

“What remains”, she said last month, “is the pressure that employers can exercise on employees, through being able to dismiss workers without giving a reason.”