Battle of wills grips top French business lobby

17th March 2008, Comments 0 comments

France's top employers federation is caught in a fierce battle of wills between would-be reformers and a powerful industrial old guard.

   PARIS, March 17, 2008  - France's top employers federation is caught
in a fierce battle of wills between would-be reformers and a powerful
industrial old guard, pinned under the spotlight over a financial scandal.
   Sparked by a cash scandal at an industrial lobby group, the conflict has
turned into a tug-of-war aimed at wrenching power from the barons of industry
who have dominated half a century of French labour relations.
   It pits the head of the MEDEF federation, Laurence Parisot, against its
most powerful branch, the UIMM metal and mining lobby whose 45,000 members
include the carmaker Peugeot Citroen and the nuclear giant Areva.
   The UIMM's head Denis Gautier-Sauvagnac was forced to step down and placed
under investigation over the revelation in September that some 19 million
euros (30 million dollars) had been withdrawn in cash from its accounts since
   Investigators believe they have stumbled on hidden "war-funds" used by the
century-old metals federation to subsidise trade unions and "buy" agreements
to end industrial disputes, in an arrangement reaching back decades.
   They are also looking into suggestions of illicit political party funding,
with the questioning Friday of a former intelligence chief who alleged the
UIMM helped pay for Valery Giscard d'Estaing's presidential campaign in 1974.
   Shock over the revelations turned to outrage when it emerged late last
month the UIMM offered its disgraced ex-boss a 1.5 million euro severance
   Parisot, 48, the first woman head of MEDEF and the first elected without
the UIMM's support -- she heads a polling firm -- reacted furiously, accusing
an industrial "old guard" of giving business a bad name.
   She forced the UIMM to review its golden parachute offer and demanded that
its new leadership remove half a dozen Gautier-Sauvagnac allies from its
board, which it is expected to do this week, and turn its back for good on
under-the-table methods.
   President Nicolas Sarkozy has come out in support of Parisot, who met with
a a delegation of business leaders Friday, including from engineering giant
Alstom, Gaz de France, and the Vinci and Lafarge construction firms, to enlist
their backing.
   "We were unanimous on the need for strong principles of ethics,
transparency and modernity," she said afterwards.
   There are concerns a drawn-out conflict could further sap French confidence
in big business, coming hot on the heels of a multi-billion-dollar rogue
trading scandal at Societe Generale bank.
   Last week, after Parisot and two former UIMM chiefs traded accusations of
lying, the CGPME small business confederation urged them to put an end to
their "schoolyard fight".
   But the UIMM revelations are ammunition for those -- like Parisot -- who
question the industrial lobby's continuing influence in an increasingly
services-driven economy.
   Parisot opened a new front in the battle by demanding the UIMM resign the
100 mandates it holds on MEDEF's behalf on official bodies in charge of
billions of euros of welfare spending -- which give it a front-seat role in
labour negotiations with unions and the state.
   Under an arrangement forged after World War II, French unions, business and
the government jointly manage spending in areas such as unemployment and
pensions, with MEDEF holding a total of 940 seats.
   "This is really about reducing the metal industry's grip on labour
negotiations," said industral relations expert Pierre Heritier. "After World
War II, the UIMM got a hold on these matters and refused to let go."
   The UIMM believes it had built up unique legal and technical expertise as a
negotiator and has so far refused to budge on the issue.
   But industry's share in the French economy has shrunk since the 1970s from
a quarter to a fifth. It now accounts for some 14 percent of French jobs
compared to more than half in the service industries.
   "The economy has changed. There is no ignoring that. We need industry, but
it can no longer speak for everyone," argued Pierre Bellon, founder of the
French catering giant Sodexho.
   Cornelia Woll, of the CERI research institute at Sciences Po in Paris, said
it was a "bold, even revolutionary" move to take on the metals lobby.
   "But the mere fact the UIMM had to comply with some of Parisot's demands,
shows that things are changing."


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