French bosses upset

Charles Brown CharlesB at
Wed May 2 09:44:47 MDT 2001

French plan for redundancy pay angers employers

Financial Times; Apr 25, 2001


French employers reacted angrily yesterday to government plans to double redundancy pay. The measure is part of a package imposing substantial extra costs on companies restructuring their businesses.

Medef, the employers confederation, accused the government of acting precipitately for purely political reasons and of using "the most old-fashioned habits of a command economy".

The package - to be rushed through parliament on the back of an existing bill - contains up to seven measures that would increase the cost of shedding labour. More could be added in parliamentary debate and Medef fears the outcome could mark a significant shift in the balance of power from employers to employees.

In Medef's toughest ever statement, the employers put the government on notice: "At the very moment when we have confirmation of a slowdown in growth, this improvised legislation increasing the burden of regulatory procedures can only damage job creation and have a negative impact on investment decisions in our country."

The proposals were unveiled yesterday before parliament by labour minister Elisabeth Guigou.

The government has been forced to act to head off pressure from its leftwing supporters who have demanded greater protection for workers following last month's closure announcements by Danone, the French food group, and Marks and Spencer, the UK store chain.

Such has been the hurry that the details have not been worked out. But the measures are tougher on companies than originally indicated by the government when the controversy broke over Danone and M&S's restructuring plans.

The proposals could yet fall foul of the courts since they are being attached to a bill that has already passed its first reading. Such a procedure is only acceptable if the amendments do not alter the shape and purpose of the existing bill.

The most significant element of the package is a doubling of redundancy pay from one-tenth of annual salary per year worked to one-fifth. The other proposals - aimed essentially at those employing more than 1,000 people - shift the initial burden of unemployment much more heavily on to the employer.
These other measures include:

* Increasing the social security contributions for companies axing workers aged over 50.

* Giving greater freedom and more time for works council to consider restructuring plans.

* Allowing employees the right to be reassigned another job and a paid holiday to find new work.

* Increased control by works inspectors over the drawing up and execution of restructuring plans.

* Tighter control over public funds given to companies that restructure.

* Obliging companies to contribute to the re-industrialisation of sites being closed down.

Copyright: The Financial Times Limited

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