Renault's CEO Is On A Desperate Mission To Save France

Carlos Ghson

Photo: Wikimedia Commons

labour laws protecting workers are sacrosanct in France. Efforts to change them are met by massive protests from unions, who want to protect statutes that make it difficult for companies to fire people or cut wages. That’s despite those laws having been pinpointed as slowing the country’s ability to grow and compete. 

Now, the CEO of one of the country’s most prominent companies is on a mission to change things.

Renault’s Carlos Ghosn managed to strike a deal with unions in Spain last year in which he agreed to boost production and hiring, in return for concessions including more flexible work rules, like the ability to run factories 7 days a week, and the ability to hire low wage temporary workers. According to Ghosn, this deal would have been “unthinkable” a few years ago.

Spain’s dire economic situation gave him the sort of leverage he’d never had before. 

France is next, he tells The Wall Street Journal. “Obviously what you do in one country leads you to say: ‘If we reach this kind of agreement in a country in Europe, let’s try to obtain the same result in a different way in another country,'” Ghosn said. 

He’s playing hardball, apparently telling union negotiators that failing to reach an agreement would force plant closures.

In his interview with the Journal, Ghosn seems optimistic about his prospects.

There’s one issue though: France is not Spain.  

Though the economy has stalled in France, it’s nowhere near as bad as Spain’s. Spanish youth unemployment has nearly broken 60 per cent. France’s is bad, but much lower at 27 per cent. 

That made Ghosn’s offer to boost production and hiring much more effective as a negotiating carrot in Spain than it will be in France. Spending from Francois Hollande’s socialist government also provides a buffer, and there will be less pressure from outside forces, like the government, to accept the deal. 

The unions in France see conceding here as the first step towards more concessions down the line, and may be willing to risk plant closures rather than give up rights they’ve fought over for years. 

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