Where le fairplay still rules

The French skated around the Thatcherite revolution - and their economy is none the worse for that

Jon Henley in Paris and Mark Milner
Wednesday May 2, 2001
The Guardian


When Motorola ignored ministerial pleas and announced the closure of its Bathgate plant last month the government expressed disappointment and politely asked for its regional development aid back. In France when Marks & Spencer and food group Danone announced closures and mass lay-offs, workers took to the streets and the government reached for the statute book.

The reaction from the government and workers speaks volumes about France's very French approach to capitalism. True, the news from M&S and Danone was followed by a warning from Dim, the underwear maker, that "major restructuring" is on the way; Moulinex, the household appliance manufacturer, has decided to scrap 1,500 jobs in France; Alcatel, the electronics firm, is to sell one of its French mobile phone plants; and 2,700 staff at two domestic airlines have been told their jobs will go by June.

The global economic about-turns and shifting consumer behaviour patterns that explain this rash of large-scale redundancies matter little in France. What counts is the corporate response - and except in cases of dire, bankruptcy-looming necessity, selling off, shutting down, cutting back or pulling out are just not acceptable courses of action.

That is why Marks & Spencer's decision was described as "brutal", "unacceptable", "inhumane" and "scandalous", not just by furious French trade unions but by an equally furious Socialist prime minister, Lionel Jospin, in what looked at first suspiciously like a bout of Brit-bashing.

In a front-page rant, Le Monde Diplomatique asked whether one could expect any better of a country that had for more than 20 years been "a laboratory for ultra-liberal market economics" where "perverted minds" had favoured profit over sensible state regulation.

Overwhelming revulsion
A fierce Gallic rejection of what are known here as "Anglo-Saxon business practices" in part explains the superstar status accorded to figures like José Bové, the pipe-smoking peasant activist who won fame by trashing a McDonald's restaurant.

Now that native French companies are up to the the same sort of thing, it is clear there is more to it. Danone's plan, inspired not by present financial woes but by a desire to shore up future profits, was described as "completely unjustifiable" by 85% of respondents in a recent survey.

So why such overwhelming revulsion at a straightforward, if tough, business decision? One answer is that France, which despite the influence of an omnipresent state has always been reluctant to place too much power in any one person's hands, never had its equivalent of the Thatcher revolution with its diet of deregulation and privatisation.

In France the great mass of public opinion believes companies have a real social responsibility. "Stock-market layoffs", designed to please shareholders, are unacceptable, and employees, as a trade unionist said, "cannot be treated like pawns to be sacrificed on a chess board".

What the French do want and expect from their employers is a virtue they have, paradoxically, imported from the English: le fairplay. Most also believe it is up to the government to ensure businesses do play fair.

According to Stéphane Rozès of the CSA polling organisation, in a period of economic growth "the very idea of redundancies is insupportable. People are not stupid - when times were bad, they were content to ask the government to limit the damage. Now they demand regulation."

Regulation is what they got. Seizing on the perfect opportunity to make up lost ground after a poor showing in last month's local elections, Mr Jospin's government announced a package of measures to deter companies from mass firings.

These included doubling the minimum redundancy pay, forcing companies to offer staff six months of retraining to help them to find other work, and fining those that fail to help develop replacement activities on sites they shut down. Employees are also to be given more say in restructuring plans, and allowed to hire management consultants to come up with alternatives.

It was a revival of the kind of orthodox French statist intervention that seems a million miles from Tony Blair's response to Motorola's Bathgate closure. In traditionally dirigiste France it plays well, and for some it did not go far enough. Mr Jospin's Communist coalition partners demanded that all layoffs by profit-making companies be made illegal.

France's highly regulated labour market and the hefty social costs of employing workers may be decried by the 200,000 or so French people who have moved to London in recent years to find work, and by the hundreds of young French entrepreneurs who have set up shop in Britain or America where job laws are more flexible, meaning it is easier and cheaper to hire and fire.

They do not, at the moment, appear to be doing a great deal of harm to France's economy, which is faring just as well as Britain's and, according to the International Monetary Fund, will grow at 2.6% this year and next - leaving a slowing US economy in its slipstream.

Last year the French economy generated 500,000 new jobs. This year, accord ing to Stéphane Déo at investment bank UBS Warburg in Paris the total is likely to be 300,000.

Then there is the 35-hour week. The Jospin administration's job-creating brainchild was greeted with hoots of derision when it was announced in 1997. It is now in place for companies employing more than 20 people, and to the surprise of many observers has won over most of its opponents.

Underlying reality
Surveys have shown 80% of the 5m French men and women benefiting from three or four weeks' extra holiday a year felt the shift to 35 hours had been "positive or very positive" for them personally.

Of company directors, 60% believe the law has helped to increase productivity through renewed dialogue with the workforce, reforms to outdated and inflexible working practices, and increased morale.

Proof that the Anglo-Saxon camp is wrong? Not quite. The underlying reality is that France has introduced a number of significant economic reforms. Large sections of the economy have been privatised.

Little of the banking industry remains in the state sector. Much of the defence industry has been privatised and merged with German and Spanish partners. National symbols such as France Télécom and Air France have been sold to investors.

Jospin's Socialist government has been no less willing than some of its rightwing predecessors to roll back the frontiers of the state. Despite France's reputation for strikes, the economy has benefited from wage restraint for much of the 1990s. Many of France's leading companies, like the vast new media conglomerate Vivendi which owns Universal studios, are lean, mean business machines very much on the Anglo-Saxon model.

For all the changes France has not embraced the the symbol of the liberal market; shareholder value. The country clings to the notion that employers owe rather more to their employees than the equivalent of a P45 in exchange for a few pence on the share price.

Economic Straits