Hollande vows ‘tough action’ to restore competitiveness

Updated 06 November 2012
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Hollande vows ‘tough action’ to restore competitiveness

PARIS: French President Francois Hollande pledged “tough decisions” as a new report recommended a “shock” 30-billion-euro ($ 38 billion) reduction in labor costs to improve the country’s industrial competitiveness.
The 22-point document was presented by its author Louis Gallois, former head of the French SNCF railways and of the EADS aerospace group which controls Airbus, to Prime Minister Jean-Marc Ayrault.
“Tomorrow the government will draw conclusions from the Gallois report and tough decisions will be taken,” Hollande told reporters in the Laotian capital Vientiane, where he is attending an EU-Asia summit.
He stressed the need for a “holistic policy” to address France’s flagging industrial competitiveness as the country faces the challenge of dangerously overstretched public finances, anaemic growth and a huge trade deficit.
Gallois said the need of the hour was a “sort of social pact between all the partners,” adding that a “shock” reduction in labor costs was needed to kickstart the economy.
“The French must back this collective effort,” he said, appealing to “patriotism.”
He proposed cutting employer payroll levies by 20 billion euros and those paid by employees by 10 billion euros over two or three years.
This would mean shifting part of the tax burden on to workers by increasing the so-called CSG levy which helps fund the social security system, or increasing the VAT sales tax.
The review, commissioned by Hollande and the latest in a line of such reports on what is wrong with the French economy, has been described by the right-wing opposition as a last chance to change direction.
France’s hourly manufacturing costs are 20 percent higher than the eurozone average, according to the EU’s statistics agency Eurostat.
But ministers have already rejected a suggestion Gallois made in July that what the country needs is a big and sudden “shock” to boost efficiency, saying instead that measures will be spread out over five years.
The spotlight is on deep structural reforms which run counter to French habits. But similar reports for the government in the past have tended to be quietly locked away where they cannot upset the voters.
This time the government — facing having to impose austerity policies as the economy stagnates — says the analysis will not be buried.
The share of French industry in global trade has shrunk from 6.3 percent in 1990 to 3.3 percent in 2011 as production costs have risen relative to those in other countries, in particular to euro zone neighbor Germany.
The government has set a target of eliminating during its five-year term the country’s 25-billion-euro ($31-billion) trade deficit excluding energy.
The competitiveness pact is shaping up to be a key initiative to rejuvenate the economy as the government is being forced to apply 37 billion euros ($ 47 billion) in austerity next year to meet the country’s EU fiscal targets.
With the unemployment rate rising back to 10.0 percent, pressure has been building on the government to act.
Gallois has already enraged unions by suggesting taking the labor cost issue by the horns and cutting payroll levies paid by employers.
Business leaders have piled pressure on the government, with the heads of 98 of the biggest French groups calling for a 30-billion-euro cut in welfare charges paid by employers over two years, along with massive cuts in public spending.


Taxi drivers, Uber square up on Istanbul’s roads

Updated 58 min 33 sec ago
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Taxi drivers, Uber square up on Istanbul’s roads

  • Uber has enjoyed soaring popularity in Istanbul, where users appreciate the cashless payment system, security and convenience of hailing a cab by phone
  • This has stoked antagonism with official taxi drivers, who have brought legal cases in Istanbul in a bid to have the app blocked in Turkey

ISTANBUL: Istanbul’s bright yellow taxis, ubiquitous and perennially honking for custom, appear ingrained in the daily life of the Turkish metropolis.
But could the fast-growing ride sharing app Uber make them a thing of the past?
Uber has enjoyed soaring popularity in Istanbul, where users appreciate the cashless payment system, security and convenience of hailing a cab by phone.
But, as in several other European cities, this has stoked antagonism with official taxi drivers, who have brought legal cases in Istanbul in a bid to have the app blocked in Turkey.
Tensions have also spilt over into violence, with Uber drivers complaining of being verbally harassed, beaten up or even shot at.
Kemal Kuru, an Uber driver since last year, said he was cornered and beaten by a group as he set off for a concert hall in the Sisli district last month on a job.
“I went to pick up a customer around midnight but someone blocked the road and harassed me verbally,” he told AFP.
“I got out of the car and all of a sudden 10 people attacked me... My teeth were broken and my lip was split.”
Kuru said the assailants could not be immediately identified as they fled into the darkness. But he pointed the finger at taxi drivers.
“I believe our income is getting on their nerves and they think we are stealing their customers.”
In March, shots were fired at an Uber vehicle in Istanbul’s Kucukcekmece district. The driver escaped unhurt.
Uber drivers say they are easily targeted as the vans they generally drive are unusual in the city.
But representatives of official taxi companies condemn such accusations — widely publicized in the Turkish media — as a stunt to discredit their business.
Eyup Aksu, head of the main taxi drivers’ association in Istanbul, accused Uber of launching a “publicity campaign” in an attempt to influence the pending legal cases.
“Taxi drivers have never resorted to violence against Uber. This is a smear campaign to blacken the reputation of taxis,” he told AFP in his Istanbul office.
There are almost 17,400 official yellow taxis in Istanbul, providing an essential and relatively affordable service in a gigantic city where public transport often falls short.
But as new competitors like Uber have emerged, the official taxis have often failed to keep pace with changing times and society.
They have been slow to implement systems to pay by card, install panic buttons that help female passengers in particular feel more secure and are only now considering lights to indicate if the cab is occupied or free.
In a bid to trump Uber, Istanbul taxis are themselves now becoming part of a digital network called iTaksi that allows passengers to order them from their phone.
Aksu admitted some deficiencies in the taxi sector but said taxis were transforming to catch up with Uber’s standards.
“We are shifting to luxurious taxi transport. We now have VIP transport in some touristic places and airports,” he said.
Meanwhile horror taxi stories abound in Istanbul — not just from incredulous tourists but also exasperated locals — about being over-charged, driven a circuitous route to ramp up the meter or being given fake change.
In a well publicized case, an Istanbul court this month handed a taxi driver a suspended jail term for having taken a Saudi passenger on an epic city tour rather than to the airport as requested.
But Istanbul taxi drivers insist they are working hard to make an honest living from a tough business where margins were already tight and now squeezed further by Uber’s presence.
Taxi drivers rent their car from the owner of the license, whose cost of 1.5 million lira (300,000 euros, $370,000) is well beyond most drivers.
The number of license plates available for taxis has stayed stable as the city’s population boomed, driving up their price.
Taxi driver Burhan Yuksek, looking for passengers in the busy waterside Eminonu district, said his business is suffering “hugely” because of Uber.
“I work by a hotel. We used to receive 40-50 calls daily from the hotel and currently it has dropped to 15-20,” he said. “They are pirates. They are stealing our labor and bread.”
Taxi drivers feel they have political backing, with President Recep Tayyip Erdogan regularly pictured drinking tea with the taxi community.
In the bigger of two legal actions brought by taxi drivers’ associations against Uber, an Istanbul court is due to resume hearing the case on June 4.
The tension in Turkey is one of a number of headaches for Uber and its new chief executive Dara Khosrowshahi, who took over last August after founder Travis Kalanick was ousted following a series of scandals.
In London where its drivers number around 40,000, Uber lost its license over its approach to reporting serious criminal offenses and its criminal record checks for drivers.
But it is allowed to operate in the British capital pending an appeal set for later this year.
Uber also put a temporary halt to its self-driving car program in the United States after an accident involving one of its cars near Phoenix killed a pedestrian.
In service for three years in Turkey, Uber has 5,000 vehicles and 8,000 drivers in Istanbul.
Vedat Kaya, of the Tourism and Development Platform, said Uber represented a “revolt against the taxi monopoly,” adding that some 4,500 taxi drivers had already switched to work with Uber.
Former taxi driver Yavuz Sarac, who joined Uber last summer, says he did it after realizing he would not own his own business “no matter if I work for 150 years.”
“Uber has presented new opportunities. I’ve owned my business,” he said, complaining that taxi drivers were exploited by the plate owners, while the Uber license was much less costly.
“I earn a living for my family. To me, it is a kind of escape from slavery to freedom.”