Arbitration in Context

The establishment of conciliation and compulsory arbitration in France between 1937 and 1939 is frequently seen as a policy primarily designed to adjust the purchasing power of wage earners. From this perspective, policy appears as a response to the inflation that followed the French franc’s instability on international currency markets. ¹ The system helped to establish collective agreements following the strike movement of May-June 1936, which it helped to prolong. Legally reinforced collective agreements became the chief instrument and basis for a wages policy. The main objective was to adjust wages in line with the economic potential of each sector, particular account being taken of possible productivity gains capable of maintaining profit levels in a non-inflationary environment. In the workplace, the arbitration procedure thus challenged traditional systems of managing productivity issues (les conventions de productivité) embodied in established production systems. ² It outlined a means to ‘share productivity gains’ which, for economic theorists, was to be the source of growth for the three decades of postwar expansion.