Law of Career Security: France's Minister of Digital Economy Orders Telecom Companies "to be Virtuous and Patriotic" and to Use Alcatel-Lucent to Prevent Layoffs

In France, companies need approval from the unions and the government to fire workers. The government gets to decide if you make too much money to lay anyone off. Moreover, the government can decide you make too much money, even if you have a loss.

Then there's the newly passed "Law of Career Security" to consider. Yes, that's the precise title.

It took me a bit to piece this story together because translations from French are particularly difficult.

Alcatel-Lucent Background

Before tackling French news reports from Wednesday, here is an Alcatel-Lucent Factbox from the Chicago Tribune, in English.

Paris-based telecom equipment maker Alcatel-Lucent unveiled plans on Tuesday to cut about 10,000 jobs worldwide by the end of 2015 in a cost-cutting drive to save 1 billion euros and reverse years of losses.

Alcatel mainly builds and develops telecommunications networks and related equipment for network operators - such as Verizon or AT&T - and other enterprise customers.

Alcatel-Lucent was created from the merger of France's Alcatel and U.S. firm Lucent in 2006, against a backdrop of global competitive pressures that also led to a similar tie-up between Nokia and Siemens to create Nokia Siemens Networks.

The cuts announced on Tuesday are across all regions, with 4,100 jobs to go in Europe, the Middle East and Africa, 3,800 in Asia-Pacific and 2,100 in the Americas.

It is not the first job-cuts plan at Alcatel-Lucent: in 2012, it said it would axe 5,000 jobs and in 2007 it announced 12,500 job losses.

Alcatel has only reported one year of profit since the merger, in 2011, ending every other year in the red.

In 2012, Alcatel swung to a full-year net loss of 1.2 billion euros, hit by lower sales in Europe and China, and an impairment charge.

10,000 Job Cuts (900 in France)

Cutting 10,000 jobs would generally not be a problem for any company of sufficient size, unless 900 of them are in France (as is the case here).

Jean-Marc Ayrault, the socialist prime minister of France, warned the management of Alcatel-Lucent that it was "no go" on job cuts unless the unions agreed.

I propose the likelihood of union agreement is about zero.

With that background out of the way, please consider a pair of articles translated from  from Le Monde.

Alcatel-Lucent Showdown Begins

First consider Alcatel-Lucent: The Showdown Begins

"If there is no majority agreement, the layoff plan will not be approved, since the law now gives the state the responsibility to approve layoffs" warned prime minister Jean-Marc Ayrault.

Mr. Ayrault said that future negotiations between management and staff representatives,  will begin on October 23. Negotiations will be under the national agreement (ANI) which covers modernization of the labor market.

The ANI provides procedures for collective redundancies including validation by the administration.

Arnaud Montebourg Chimes In

Where there's socialist nonsense in France, one can expect to find Arnaud Montebourg, France's "Minister of Industrial Renewal".

In addition to Montebourg, I have a new position to discuss: "Minister of Digital Economy".

Icing on the socialist cake is the "Law of Career Security", passed just this year.

Le Monde reports Alcatel government called telephone operators to "solidarity"

The announcement of a plan office at Alcatel-Lucent, which will remove 10,000 jobs worldwide, including 900 in France, led the government to ask the French public telephone operators make efforts to help Alcatel-Lucent in preference to its foreign competitors.

"Mobile telephony operators are in the midst of extraordinarily destructive competition. Alcatel-Lucent is the first victim. I was forced to call for solidarity amongst national telephone operators such as France Telecom, and also private operators, to encourage  use  of  telecom equipment manufactured in France, on European soil, instead of the cheapest equipment companies can find," said Montebourg.

Minister of Digital Economy Orders Telecom Companies to Use Lucent

As preposterous as the story is already, it gets even more preposterous.

Fleur Pellerin, the Minister of Digital Economy, went further on Wednesday, requiring operators to be "virtuous and patriotic", and to use Alcatel-Lucent, especially at large tenders related to 4G. Two of four large telecom companies have agreed.

Law of Career Security

On Wednesday, Prime Minister Jean-Marc Ayrault, called for a "negotiation" to save as many jobs as Alcatel, noting that the law of career security, the Florange law, passed earlier this year, "gives new rights to employees to negotiate."

The Florange law gives the government fifteen days to accept a majority collective agreement negotiated between the company management and the unions and 21 days to give the green light (or reject) unilateral action by the employer in absence of a majority agreement.

Is it any wonder France is going downhill and President Francois Hollande's ratings are the lowest in history?

Is it any wonder the extreme-right is surging in French polls?

For details regarding the extreme-right, please see Marine Le Pen's Eurosceptic "National Front" Party Takes Lead in France National Poll.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com