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Parliamentary Surge Set to Help Macron Tackle French Unions

New French President Emmanuel Macron's party looks set for a landslide victory in parliamentary elections, raising hopes that France might finally address one of its thorniest issues — labor reform.

Arguing that labor laws must be changed as quickly as possible to boost growth and cut unemployment, Macron's government is already drafting legislation and plans talks with unions over the summer. At the same time, early concerns that a lack of parliamentary support would render him a lame-duck president are fading as opinion polls show his fledgling political party, La République en Marche, is set to win a big majority in the National Assembly following the two-round vote June 11 and June 18.

Former investment banker Macron was part of François Holland's previous Socialist government in 2016 when its attempts to make it easier to hire and fire workers sparked violent protests and brought the country to a standstill. In the end, the government passed watered-down reforms.

This time round, Macron plans to ask parliament for permission to enact the law by decree and hopes to have the whole thing wrapped up by the end of September.

He's on the right track to get the reform passed.

Jean-Charles Simon, President, Stacian

"He's on the right track to get the reform passed," said Jean-Charles Simon, president of economic consultancy Stacian. "It looks like he is going to get quite a clear majority. The only other major political force is les Républicains on the right and he's likely to get their support. So I don't see him having any difficulties."

"The only thing that could stand in his way is a show of force by the unions," Simon said in an interview. "But I don't think they will … It's not the same political context as it was with Hollande and (former Prime Minister Manuel) Valls. Macron is on a roll, whereas the Socialist Party was coming to the end of its term and was very divided."

As Hollande's economy minister, Macron implemented legislation — dubbed the "Loi Macron" — to increase competition across different economic sectors. It allowed more shops to open on Sundays and liberalized the transportation market.

Observers say Macron has also chosen an optimal time to pass his new reform: during the long summer months.

"He has a window of opportunity where a lot of French people will be on vacation. It's far less likely to have strikes during the summer," Tomasz Michalski, associate professor of economics at HEC business school near Paris, said in an interview, adding that French unions are losing their stranglehold on the economy, with only 8% of the workforce unionized.

Unions may also have overplayed their hand when they blockaded refineries in 2016, leaving petrol pumps dry.

"It hurt a lot of their political capital and they are not well perceived," Michalski said. "But they have a strong nuisance factors as they are active in key sectors in the economy."

Need for change

While unions will likely attempt some resistance, Macron's rise to power without the support of established political parties show the French want change, analysts said.

"The unions know there's a desire for a new kind of politics in France. They know people don't want to hear union leaders complaining," said Agnès Verdier-Molinie, head of think tank IFRAP.

The unions have been invited for meetings with the government, but some of their members fear reforms may go further than expected.

"If there are explosive measures … I am telling you, we have not changed our minds since last year," Le Parisien newspaper quoted left-wing CGT union leader Philippe Martinez on June 8. "Rallying is still on the agenda. When, how, in what way? We don't know yet."

Macron aims to make it easier for companies to negotiate pay and time off, simplify the structure of worker councils and also limit the risks from hiring people by capping compensation from tribunals. At the moment, judges can rule on awards, which vary significantly.

"The measures are very detailed and don't seem to be a big bang, but it does change the margin," Michalski said.

No panacea

Reforming a labor code created when the economy was structured around large industrial groups will not in itself be a panacea for France's economic ills, which include an unemployment rate that has hovered around 10% for almost 10 years and youth unemployment of more than 20%.

Their (Macron's government) credibility depends on this reform.

Agnès Verdier-Molinie, Head of Think Tank IFRAP

Macron should also implement other campaign pledges including encouraging apprenticeships, tackling the country's generous unemployment benefits and lowering high-payroll taxes, Michalski said.

"The entire agenda will help make France's labor market more functional," he said.

But even this will not be enough for some.

"It's a way of going round the obstacles, but it doesn't really confront the problem head on," IFRAP's Verdier-Molinie said, calling for the government to eradicate the 35-hour work week.

"Their credibility depends on this reform. The government needs to deliver on the reforms that we are expecting from them."