Introduction

In this chapter, we ask whether the direction of labour market reforms in France has changed since 2010 by comparison with the previous two decades. In 2009, in the aftermath of the global financial crisis and the coordinated fiscal stimulus in Europe, France's general government budget deficit reached 7.2% of gross domestic product (GDP). This prompted the European Commission to propose placing France under the corrective arm of the excessive deficit procedure in order to bring this deficit below the 3% of GDP limit stipulated by the Stability and Growth Pact. A similar shift in fiscal policies, from stimulus to austerity, took place across pretty much the whole European Union (EU) during 2009–12.

France is a particularly interesting case from a comparative perspective. Characterised by a conservative-corporatist labour market regime, it stands in between member states with corporatist labour market regimes in Southern Europe (Italy, Greece), which have faced overt or covert pressures for reform in a certain direction since 2010 due to real or impending fiscal crises, and member states such as Germany, in which fiscal pressures, although present and self-inflicted due to domestic politics, have been much weaker. In this chapter, we look into broad labour market policy areas, namely, income support for the unemployed, active labour market policies and employment protection legislation before and after 2009, and ask the following questions. What form has retrenchment taken under the recent fiscal pressures and how has it been distributed across these policy domains? Has the emphasis of active labour market policy instruments changed? How have policy changes affected insiders and outsiders in the labour market?

We show that during the economic crisis and the subsequent fiscal austerity period, there were no paradigmatic changes in French labour market policies, which continued to develop along a path pursued since the early 2000s. Successive governments, both centre-right and centre-left, have implemented flexicurity à la française, with a focus on flexibility at the expense of security. External flexibility – firms’ ability to hire and dismiss workers – has been developed for both core workers and more precarious forms of employment (temporary work). Furthermore, new measures also introduced important changes in the field of internal flexibility (working-time organisation, wages) (Eichhorst and Konle-Seidl, 2008).