Bank of France head urges tougher labor regulations
PARIS -- The head of the Bank of France has asked President Francois Hollande to enact tougher labor regulations to deal with France's “serious” economic weakness.
Christian Noyer, above, warned that France was losing its global economic status and partly blamed the 35-hour maximum work week, introduced by the Socialists in 2000 and a pillar of French left-wing policy.
“France has allowed serious weaknesses to develop over the past few decades that account for the slow deterioration,” Noyer said as he presented the bank's annual report on Tuesday.
“Having paid insufficient attention to developments in its competitiveness, France has allowed its capacity to produce and to export slowly slide, resulting in rising unemployment,” Noyer added.
Noyer also outlined his concerns in a letter to Hollande, and to the heads of the two parliamentary houses -- the National Assembly and the Senate -- as part of his report.
The recently elected Hollande, whose campaign agenda included tax hikes for the rich and large companies in order to reduce the country's deficit, faces an uphill struggle to persuade unions to swallow wage curbs.
On Monday he addressed a conference of union and business leaders in Paris to discuss tackling rigid employment laws and boosting growth. He told them growth so far this year is “nil” and that the country needed to rethink its social model.
Hollande, who visited British Prime Minister David Cameron on Tuesday, has vowed to stick to his May election pledges despite gloomier than expected growth forecasts.“We need to do everything we can to generate lasting growth for the years ahead,” Hollande told the industrial conference.
On Tuesday, Noyer echoed Hollande's insistence that a high rate of expansion is needed to bring down unemployment.
“Of all advanced countries, France has registered, since 2000, the sharpest decline in its market share in global exports. The deterioration can be partly ascribed to unfavorable developments in the cost of labor in France compared with Germany, our main competitor in world markets,” Noyer said.
A study by the European Commissions statistics agency, Eurostat, in April reported France having the euro area's second highest labor costs after Belgium. A French worker costs around $42 an hour compared with just under $37 in Germany, $32.90 in Italy and $25.30 in Spain. The growing difference in wage costs between France and its European partners has been blamed on rigid working hours, and restrictions contained in the 3,200-page Working Code rulebook that covers every aspect of employment practice.
Noyer, who is also a European Central Bank governing council minister, said the European debt crisis had highlighted the need for durable structural reforms across the continent, but added: “France in particular must pursue its fiscal consolidation and improve its competitiveness, notably through comprehensive reforms of goods, services and labor markets.”
Noyer's warnings came as figures showed French industrial output slumped more than predicted and the April jobless rate rose for the 13th straight month to hit its highest mark since August 1999.
-- Kim Willsher
Photo: Christian Noyer, governor of the Bank of France. Credit: Balint Porneczi / Bloomberg