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Downsizing to Boost Profits: François Hollande Announces Watered-Down Law

Translated Sunday 3 March 2013, by Gene Zbikowski

French president François Hollande confirmed on Feb. 11 that a law on buying out “profitable” factories would be put on the parliamentary agenda. This campaign promise falls short of the bill to outlaw downsizing to boost profits, which was tabled by the Left Front.

In the course of the presidential campaign, François Hollande promised to “up the cost of downsizing for companies that are paying out dividends or buying back shares,” “in order to dissuade companies from downsizing in order to boost profits. This was the 35th of his “60 commitments for France.” This promise will be translated into law this year, President Hollande announced on Feb. 11, but not in a law forbidding profit-boosting downsizing, that is, planned redundancy schemes that have no economic purpose.

A certain number of layoffs.

“We’re not talking about companies downsizing to boost their profits, which is an idea that comes up fairly rarely in the real world. Sanofi isn’t laying off, it’s cutting jobs,” is the explanation given by the President’s inner circle.

“There will be a translation [into law] to up the cost of a certain number of layoffs or to make certain that part-time work is fought more than it is today,” was François Hollande’s comment on the matter. He is not going as far as what was proposed by the Left Front in a bill put on the table last summer.

To the concept of “profit-boosting downsizing,” François Hollande now prefers that of layoffs “at profitable factories.” His collaborators pointed out that this “bill, to be considered by Parliament before summer, will oblige a company that closes a production site to seek a buyer capable of keeping the factory open.”

Law on steady jobs

This proposal comes at a time when the deputies will soon review the so-called job security agreement signed by the main bosses’ association, the MEDEF, and three trade union confederations, the CFDT, the CFTC, and the CFE-CGC.

For François Hollande, it is a matter of giving a proof of political commitment to the left wing of the Socialist Party, which is unwilling to vote this agreement into law as-is. Moreover, the services of the French president have taken care to point out that this new law will be distinct from “the reform of the laws governing layoffs,” which is to translate into law the agreement on “making the labor market less precarious,” an agreement that was signed by the bosses and three trade union confederations on Jan. 11.

The latter reform “will be examined by the French Cabinet on March 6 and will be tabled at the French National Assembly a month afterwards,” the same source repeated.

Worker anger.

For the government, it is also a matter of soothing worker anger linked to the many planned redundancy schemes that have been announced recently. François Hollande underlined that, as “everybody knows, there are employment difficulties and hence threatened companies,” whose “workers are mobilizing.” “The French government must support them in finding, whenever possible, white knights.”

The Left Front’s bill against downsizing to boost profits.

The first article in the bill provides that “any layoff decided by a company which has paid out dividends in the course of the previous financial year is held to be without real or serious cause,” and that a laid-off worker “may file a complaint with the Health and Safety Executive” to verify compliance with the law.

The second article stipulates that “a company that benefits from government aid, in whatever form, shall not continue [to benefit from it]” unless it refrains from profit-boosting layoffs as defined in the first article. “If the company does not so refrain, it must pay back all of the aid received from the government.”

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