Analysis of the Impact of Eliminating Fixed-Term Contracts on Job Security: Insights from an Economist

Would eliminating an inherently risky contract make permanent contracts, the holy grail of job security, more vulnerable? This is a question that has appeared for decades, every time a right or left force proposes a change in the limits of the fixed time contract, or even its abolition. Already in 2004, the newspaper Spread he emphasized the ideological alignment of the planets for the abolition of the short contract, both among the Sarkozyts and… in the Socialist Party. In a post, the daily social democracy had denounced​​​​”a false good idea”. How about?

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Liêm Hoang-Ngoc, former MEP of the Socialist Party and once close to La France insoumise, with whom he broke seven years ago, is an economist, lecturer in economic sciences at the University of Paris I Panthéon-Sorbonne, authorA rebel should say that… by Éditions du Cerf (2017), and soon Europe, the enemy of the Republic? at PUF. For Marianneit returns to the relevance of the idea of ​​abolishing the CDD, and the problems that hinder this idea which seems attractive to vulnerable workers.

Marianne:Is the abolition of the CDD, proposed by some economists, in fact by nature an attack on the CDI?

Liem Hoang-Ngoc: Eliminating the CDD that some economists recommend is the alibi for relaxing the CDI that they recommend. Some promote “flexibility”, combining flexible permanent contracts and compensation “transition” periods, as in the Danish model. So the economist, associate professor at Sciences Po, Stéphane Carcillo, was able to defend this model, except that he now advocates reducing the duration and amount of unemployment benefits , which contrasts with the Danish case where compensation is “generous”: 90% of the reference salary for two years…

Is there no way to abolish the CDD without attacking workers’ rights on CDI?

The CDD has a special resource in a model where the norm is full-time, uncertain employment, where companies use temporary work to “plug the holes” if there is an illness or seasonal peak.

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This model still works very well. The data has not changed in the long run. The stock of stable permanent jobs represents nearly 85% of total employment. The average length of tenure in employment is still more than 11 years. Employment has not really become more flexible. Its total number is growing at a slower rate, so unemployment continues. But the stock of non-standard jobs – including fixed-term contracts, temporary work and independent work based on Uber – still represents only 15% of the total stock of jobs.

So instead of eliminating it, we should strengthen the CDD?

There is no need to strengthen the CDD because its objective is to give flexibility to employers to fill the company’s deficiencies, where the standard is still a CDI. The problem in France is not the structure of employment so much as what it is, which has grown enough as a result of the economic and business choices made over the past three decades.

The permanent construction contract, which lasts for the duration of the operation or “construction site”, has been proposed by some as an alternative. Is it valid?

The construction site’s permanent contract is the opposite of what advocates the flexibility of a permanent contract bidder. From the moment you want to eliminate the CDD and make the CDI more flexible, you open the door to a wide range of flexible CDIs.

Spain, in 2022, has chosen to make fixed-term employment more complicated. Fixed term contracts are limited to a total of 18 months and cannot exceed six consecutive months. As a result, the number of permanent contracts jumped, reaching almost 800,000 new signings of permanent contracts in June 2022. Is this a relevant model?

The 2021-2022 period largely coincides with the end of the Covid-19 crisis, when companies expected a strong and lasting recovery, supported by public policies. So they have increased the number of permanent employers. This trend is not unique to Spain. It explains the decline in unemployment in Europe during this period, until the return of austerity… The best protection for workers is to maintain legislation protecting full employment -temporary and permanent, by limiting the use of long-term contracts for specific periods.

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Basically, why is relaxing the permanent contract such a big right-wing idea?

Making the labor market more flexible is a popular idea on the right as conservative circles influence social legislation. But it is not because there are no rules that the economy creates more jobs. During the Great Depression of the 1930s, the labor market was extremely flexible. There was no Labor Code, no minimum wage, no unemployment benefits and yet employment had declined in a depressed economy until World War II…