Hollande vows ‘tough action’ to restore competitiveness



AGENCE FRANCE PRESSE

Published — Tuesday 6 November 2012

Last update 6 November 2012 8:21 am

| نسخة PDF Print News | A A

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.

What's happening around Saudi Arabia

JEDDAH: Five people have been killed after an accident in Madinah province. The collision, between a car and an oil tanker, happened on Wednesday afternoon. The victims were pronounced dead at the scene. Upon arrival,the Civil Defense extinguished th...
RIYADH: The Saudi-led Operation Decisive Storm and Operation Restoration of Hope have helped “defend the Islamic faith from the expansion of the Safavids,” said Grand Mufti Abdul Aziz Al-Asheikh on Tuesday.Speaking at a welcoming ceremony for scholar...
RIYADH: The Shoura Council has called on the Board of Investigation and Public Prosecution (BIPP) to effectively implement the agreements with countries on deporting prisoners, as this will result in saving SR1 billion per year.“The monthly expenses...
JEDDAH: The Communication and Information Technology Commission (CITC) on Tuesday said it is not against communication services and applications in the Kingdom, but telecom companies will have to respect the Kingdom’s rules and regulations.The teleco...
RIYADH: The Ministry of Education (MoE) has allocated over 180 clinics for schools in Riyadh and directed all its departments across the Kingdom to recruit health advisers at schools with more than 100 students.Work has already started on introducing...
RIYADH: The Moroccan experience in desert tourism is largely similar to that of Saudi Arabia, which boasts of a unique diversity in culture in its different regions, Prince Sultan bin Salman, president of the Saudi Commission for Tourism and National...
JAZAN: Deputy Crown Prince Mohammed bin Salman visited the advanced field hospital of the Armed Forces in Jazan on Tuesday.He was reassured about the injured in the ongoing battle. He conveyed the greetings of Custodian of the Two Holy Mosques King S...
WASHINGTON: US Secretary of State John Kerry expressed gratitude to Custodian of the Two Holy Mosques King Salman for the efforts the Kingdom has exerted in assisting coalition forces against Daesh.He also lauded the Saudi announcement that the count...
JEDDAH: The planned “North Thunder” military exercise is a clear message to Iran and the countries in the region it supports that any hostile intentions and actions will be firmly dealt with, an expert has said.The military drill is scheduled to be h...
RIYADH: Syrian conjoined twins will be separated at the King Abdullah Specialist Children’s Hospital at the King Abdul Aziz Medical City (KAMC) in Riyadh on Sunday.According to a KAMC spokesman, the forthcoming surgery will be the fourth and final st...
JEDDAH: Education Minister Ahmed Al-Issa has issued an order to establish a department for school security. It will be be linked organizationally to the general supervisor of school safety and security at the ministry.According to the decision, schoo...
JEDDAH: From delivering mails for Saudi Aramco to captaining Saudi Arabian Airlines’ first flight to New York, Jazza Al-Shammari’s career story is unique.“I started my career as a postman with Saudi Aramco in 1959 and continued the primary studies at...
RIYADH: A team of the King Faisal Specialist Hospital & Research Center (KFSHRC) has identified a gene responsible for cardiomyopathy.Dr. Zuhair bin Nasser Al-Hasnan, KFSHRC medical genetics consultant, said the team conducted a study on a Saudi...
JEDDAH: The Pakistan Welfare Society (PWS) organized a free medical camp and discussion on health for women at the Pakistani Consulate recently.Doctors and specialists diagnosed patients and distributed free medicines to needy patients, and arranged...
JEDDAH: Yemen Vice President and Prime Minister Khaled Bahah has thanked Saudi Arabia for standing by his country during tough times.Speaking at the World Government Summit in Dubai on Tuesday, he said: “Our GCC brothers, particularly Saudi Arabia, s...

Stay Connected

Facebook