France's Hollande to fight firms that fire workers

President-elect to impose expensive penalties on firms laying off workers
By Nicholas Vinocur
||Last Updated: 05/10/2012

PARIS (Reuters) — French president-elect Francois Hollande aims to make it financially painful for healthy firms to fire workers and will "arm wrestle" big employers like General Motors to force them to take a more "moral" approach, a senior adviser said on Thursday.

Hollande, who takes office on May 15, said before his election victory on Sunday he would seek to impose financial penalties on profitable companies that announce layoffs only in order to improve their share price.

With mass layoffs anticipated at firms including retailer Carrefour and carmakers General Motors (GM) and PSA Peugeot-Citroen, Hollande's adviser, Michel Sapin, said the president-elect would seek to apply his pledge quickly.

Sapin, who is tipped as a possible prime minister or finance minister, told France Inter radio that, short of a ban, the goal would be to make it "extremely expensive" for firms to shed workers to boost their share price.

GM said on Wednesday it would consider closing a factory in Strasbourg in eastern France, Carrefour is expected to announce 3,000 job cuts this week and PSA Peugeot Citroen is seen closing a large production site north of Paris this year.

The feared shutdowns would compound the economic woes facing Hollande. He has pledged to temper austerity in Europe, create 150,000 state-aided jobs and try to reverse an upward trend in joblessness, currently near 10 per cent, during his five-year term.

The Socialist takes over from Nicolas Sarkozy at a time of resurging fears of Greece leaving the euro zone, stuttering growth and, on Thursday, data showing that industrial output fell more sharply than expected in March.

Sapin said that it would likely take months for Hollande to achieve any traction on jobs, given the economic difficulties and the need to push for pro-growth policies on the European level that would have an effect on France.

The president-elect has so far not heeded calls to ease France's restrictive labour regulations — one of the reasons cited by ratings agency Standard & Poor's in its decision to cut France's triple-A credit rating in January.

Referring to General Motors, Sapin said: "We will start an arm wrestle with (GM) management... so they realise that there is a form of morality in economic life, that respecting workers is part of the values of a big company."

If companies did not prove that layoffs were happening for a good reason, the state would appeal to the courts as needed, he added. Sapin did not specify how the government would impose fines or penalties, short of changing France's labour code.

Under current law, it is tricky to prove that layoffs are motivated by economic difficulties. France's highest court ruled last week that a healthy firm can fire workers if it presents a suitable job-saving plan, a move that disappointed unions which had hoped for a precedent to be set that would ban the practice.

On another campaign pledge, in which Hollande vowed to block rising fuel prices for three months after his election, Sapin said it would not apply if prices were falling although measures were need to limit spikes linked to speculation.

"We're in a waning phase," he said. "That removes nothing from the need to set up tools to stop those sorts of rises."

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