France could cut labour charges for some sectors: minister

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The French government could propose cutting labour charges for selected sectors and companies as part of its plan to kickstart competitiveness, the junior minister for small and medium-sized business said on Sunday.

 Photo: Jean-Paul Pelissier / Reuters
French Junior Minister of Small Business, Innovation, and Digital Economy Fleur Pellerin visits the Belle de Mai Media Center in Marseille, September 27, 2012.
Photo: Jean-Paul Pelissier / Reuters

In an interview with TV channel France 5, Fleur Pellerin said small-to-medium enterprises will play an important role in a government plan due to be outlined on Tuesday, the day after the publication of a government-commissioned report by industrialist Louis Gallois on how to improve competitiveness.

Asked about demands to slash France's high labour charges, which business leaders say put them at a disadvantage against foreign rivals, Pellerin said: "There are sectors exposed to international competition where this makes sense and other sectors where it makes less sense."

Pellerin said there is an issue of labour charges for certain sectors as well as certain types of companies and that it would be addressed "with courage and lucidity."

Gallois, the former head of aerospace group EADS, has said publicly that to increase competitiveness, France needs "shock therapy" through a rapid payroll tax cut worth 30 billion to 50 billion euros ($38.5 billion-$64.2 billion) financed by increasing other taxes.

However, the Socialist government has rebuffed calls from business leaders to slash labour charges to boost competitiveness and raise VAT, saying that would hit consumers.

The country has some of the highest labour charges in the world in order to finance its welfare state. Business leaders blame those hefty costs for putting them at a disadvantage with foreign competitors and driving France to a record trade deficit last year of more than 70 billion euros. ($1 = 0.7785 euros)

(Reporting by Jean-Baptiste Vey; Writing by Elena Berton; Editing by Marguerita Choy)

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