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Hollande jobs pledge faces test as corporate France readies cuts

Bloomberg  |  Paris 

France Inc risks losing more than 15,000 jobs in the months ahead, testing Socialist President- elect Francois Hollande’s resolve to block firings.

Companies from Carrefour SA and Peugeot SA to Air France- KLM and Vivendi SA are reorganizing operations to counter shrinking growth as the economy at home and across Europe slows.

The presidential race prompted many companies to put job-cutting plans on hold to avoid becoming a campaign subject.With the May 6 vote behind them, the wave of firings may start, unions say.

A 12-year high jobless rate led Hollande, who will be sworn in tomorrow, to say he’ll do whatever it takes to prevent job reductions. His commitment faces an early challenge after Georges Plassat, chief executive officer-designate of Carrefour, began talks last week with unions at the world’s second-largest retailer.

Carrefour forecast lower profit five times in the last six quarters even after failing to replace the 3,000 people who leave each year.

“The fear is that these losses will increase and be more brutal,” Bruno Moutry, a Confederation Francaise Democratique du Travail (CFDT) union representative, said in an interview. “We want to stop this hemorrhaging.”

Carmaker Peugeot has indicated job losses could come in the months ahead, saying its plant in Aulnay-sous-Bois, near Paris, which makes the 12,800-euro ($16,500) Citroen C3 compact and employs about 3,300 workers, has a “competitiveness problem,” calling into question its future beyond 2014.

In the phone industry, regulator Arcep said in March companies may eliminate as many as 10,000 jobs to adapt to competition from Iliad SA’s new mobile service. Vivendi froze hirings at phone unit SFR and may unveil plans before the end of June for further cost-cutting.

France has lost more industrial jobs than any other european country over the past decade. Its employment rate, which measures the proportion of people with jobs, is lower than Germany, Austria, the Netherlands and Portugal, according to economic think-tank Coe-Rexecode.

“France has very difficult structural problems, especially the large number of young people without much qualification who are looking for their first job,” said Bruno Cautres, a political analyst at Cevipof, a political research center in Paris. “won’t be able to erase these problems with a magic wand.”

Hollande is getting requests for meetings from union representatives worried about the future.Petroplus Holdings AG workers from the Petit-Couronne refinery in Normandy and is awaiting an acquirer, have asked for a meeting with Hollande.

Confederation Generale du Travail union representative said.

President Nicolas Sarkozy had sought to encourage job creation by eliminating employers’ social charges and pushing companies to reach labor accords outside of national contracts. That won him few friends at unions.

Hollande received support in the election from unions, with Bernard Thibault, the head of the CGT, breaching traditional neutrality to endorse him.

“Despite a leftist president coming to power, our fight continues,” said Nicolas Vincent, a CGT union representative at Petroplus.

“Our goal is getting an industrial acquirer for the site as soon as possible to ease tensions.” he added.

Energy workers are among the most unionized in France. Over his tenure, Sarkozy faced two paralyzing refinery strikes and one at nuclear operator Electricite de France SA. Petit-Couronne was the fourth refinery halted in France in two years.

Holding Pattern
“Relations with unions should be easier under Hollande,” Cautres said. “They will be in a positive holding pattern, at least for a little while.”

Almost immediately after he takes office, Hollande will be in the midst of a labor conflict that has erupted at Corsica ferry operator Societe Nationale Corse-Mediterranee, which is 66 percent owned by water company Veolia Environnement SA. Workers at the unit have been on strike and have vowed to continue to fight for job guarantees.

Another long-simmering conflict is at ArcelorMittal which extended the idling of its Florange steel factory in northeastern France, a move unions have said may spell the end of the site. ArcelorMittal spokeswoman Lynn Robbroeckx couldn’t be reached for comment.

Workers say Hollande will have to make decisions about the plant’s future as soon as this month. The French state is paying salaries to more than 600 employees -- who are out of work -- since last year when ArcelorMittal closed furnaces at the site, according to Jean-Marc Vecrin, a representative of the CFDT union. The salary deal is reaffirmed every three months.

High Hopes
“What is certain is that a lot of decisions about jobs and factories were put on hold,” Vecrin said. “Hopes are high for the new government.”

The list is long.

Alcatel-Lucent SA (ALU) is halfway through negotiating with unions on getting rid of about 5 per cent of its 9,000-strong workforce in France, mostly through reassignments, according to the CFE-CGC union. The phone-equipment maker’s spokesman Simon Poulter declined to comment on the number of positions affected.

Vivendi wants to lower operating expenses at its SFR mobile-phone unit by as much as 450 million euros this year through firings and spending reductions, two familiar sources said. Nicolas Chatin, a spokesman for SFR, declined to comment.

ST-Ericsson, the chip-making venture of STMicroelectronics NV and Ericsson AB, plans to eliminate 1,700 jobs. The venture, which employs 6,700 people, has one of its biggest sites in the French city of Grenoble.

Air France-KLM’s restructuring plan has studiously avoided mentioning job cuts, although unions say there will be some.

Hollande’s Proposals
Hollande has said he will force companies to cap firings. His proposals include an obligation for profit-making companies that want to close their business to find a buyer to take over operations and the jobs.

The 57-year-old president-elect, who said in 2011 that he would deter profitable companies from cutting jobs, has watered down his stance in recent months. He said in a letter to the lawyers for a social-rights association that the current legislation for jobs losses wouldn’t be modified.

Still, Hollande’s campaign promises have given hope to some industries. Solar-power companies are looking to the Socialist to reverse the more than 10,000 job eliminations since December 2010 as subsidies to the sector were reduced under Sarkozy, according to trade group Enerplan.

Hollande has pledged “considerable” development of renewable energies through measures that would also entice companies to make equipment in France.

“Small and medium-sized companies were the worst-hit,” Enerplan president Thierry Mueth said by telephone. “We are confident these jobs can come back if does what he has promised.”

First Published: Tue, May 15 2012. 00:41 IST