France’s social model: between resilience and erosion.

Summary The notion of “social model” is quite familiar in the French social and political debate. Its main pillars date back to the aftermath of WWII, as they were defined, in their big lines, by the political program of the Resistance movement (the Conseil National de la Résistance, which federated the opponents to the German occupation and the Vichy regime). The Social Security System was created in 1945, a new status for the Civil Service adopted in 1946, the legal minimum wage introduced in 1950, while the freedom of collective bargaining and social dialogue was officially restored, and the regulation of the labour market was progressively reinforced up to the late seventies. Since then, the attachment to the “modèle social français” has been widespread among the French population – as illustrated, for instance, by huge demonstrations and strikes to oppose reforms such as in 1995 (concerning the pension system in the public sector) or 2006 (attempt to introduce a new labour contract), when the governments had to withdraw the contested reforms. Even if some political discourses may have referred to the so-called "neo-liberal" agenda, frontal attacks on the social model have remained limited. Even, if President Sarkozy denounced the rigidities and unsustainability of the French social model when he was elected in 2007, when the crisis did come, he acknowledged that this model had protected France from deeper economic and social turmoil. Nevertheless, several reforms have been implemented, and the French social model has undergone some important changes. One may identify three main drivers of the changes that have occurred since the beginning of the 2000s. The first driver was the fight against mass unemployment. Since the mid-1980s, the unemployment rate in France never fell below 7.4% (the lowest level, reached in 2008). Beyond traditional labour market policies - that have played an important role since the beginning of the eighties - a consensus had emerged, from the early nineties, for giving the priority to the lowering of the labour costs of low skilled / low paid jobs, but without impacting the purchasing power of the legal minimum wage (the so-called "SMIC"), a cornerstone of the French social model. Other strategies were much more controversial (such as the reduction in the weekly working-time to 35 hours). From the 2000s, the new agenda consisted in reforming the labour market functioning, as well as adapting the rules of social dialogue, to facilitate these reforms. The second driver was the difficulties and failures of the Social Insurance System. The issue of financial sustainability was raised by the increasing deficit- mainly due to pensions, because of demographic reasons, and health, with spending growing faster than GDP. But another priority was also to plug the holes of the system – i.e. to cover the increasing number of those excluded or ill-covered by social insurance. The third driving factor was the attempt to reduce public deficits. Since the beginning of the eighties, France had never experienced a balanced public budget. The issue was also about the sustainability of the whole system, in a context of declining fiscal resources due to cuts in taxes on high incomes and business benefits. Curbing public spending became a high priority in 2007 with the election of President Sarkozy, and even more unavoidable when crisis of public debts broke up in 2011. In Section 2 we present the main features and specificities of the French Social Model. In section 3, we analyze the main reforms and changes and their consequences in four fields: social dialogue and industrial relations. labour market regulations and policies. social protection and redistribution. public sector and public service delivery. Section 4 documents and analyses two specific case studies– the first on the minimum wage as the pillar of the inclusive wage policy, the second on the reforms of social dialogue and industrial relations in the 2000s. Section 5 summarizes the arguments and findings, and raises some policy issues.