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September 22, 2017

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French business chiefs urge reforms as Hollande starts crisis talks

PARIS--The biggest business leaders in France turned up the heat on embattled President Francois Hollande with demands for radical reforms just as he headed into crisis talks on Monday with the heads of the IMF, WTO and other top economic bodies.

As Hollande launched talks on the eurozone debt crisis and ways to revive growth, the heads of 98 of the biggest French groups pleaded the case for a 30-billion-euro cut in welfare charges paid by French employers over two years, and massive cuts in public spending.

"With a record public spending of 56 percent of gross domestic product, we have reached the limit of what is tolerable," said the Afep, which represents more than 90 of France's top companies, in an open letter to the president.

Their onslaught against increases in taxes and charges comes in the midst of growing national controversy about ways to make a lagging French industry, with factory closures announced almost every week, competitive in international trade.

But two leading ministers immediately rejected such radical action.

The revolt by big business comes just weeks after small business entrepreneurs forced the government to rethink proposed taxes on the profit of selling a start-up.

France has a huge structural trade deficit.

Hollande, on the ropes in opinion polls and under attack for perceived muddle in the Socialist government, is grappling with pre-election pledges to create jobs and spur growth while applying austerity to plug a 37-billion-euro (US$47 billion) hole in public finances.

"For companies, the working costs must be reduced by at least 30 billion euros over two years by cutting the employers' portion of welfare charges," said the letter published in the Journal du Dimanche weekly.

The business leaders also called on the French government to slash public spending by 60 billion euros — or 3 percent of gross domestic product — over five years.

"Our (profit) margins are at record lows," they said, also evoking the record unemployment level which has breached the three-million mark to a rate of more than 10 percent.

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