Peugeot warned over French sackings

12th February 2009, Comments 0 comments

France’s finance ministry warns the auto giant, which has requested for a state loan of EUR 3 billion, about laying off French workers.

PARIS – France's finance ministry warned auto giant PSA Peugeot Citroen on Thursday not to lay off any French workers after confusion over plans to reduce its workforce by 11,000.

Peugeot has promised President Nicolas Sarkozy it will not sack any French staff this year in return for a state loan of EUR 3 billion, a deal that saw Paris accused of protectionism.

The firm, Europe's second-largest carmaker, reported steep losses Wednesday and warned that it would need to shed thousands of workers from its European plants in 2009 while cutting production by a fifth.

Following the announcement, executives scrambled to explain that only 3,550 French jobs would be cut, and that these would go on a voluntary basis under a redundancy plan already announced at the end of last year.

On Thursday, officials in the office of Finance Minister Christine Lagarde told AFP they would meet with the firm to confirm that Peugeot does not plan any compulsory redundancies in France.

"We are going to keep a very strict eye on the group to make sure it respects its undertakings," a senior official said. "There are provisions in the agreement for financial sanctions if these promises are not met."

But while the French government appears confident that Peugeot's promise to its French workers will be met, any suggestion that they are getting special treatment because of the government loan will be controversial in Europe.

The Czech Republic and Slovakia, which host Peugeot plants, have accused Paris of protectionism, and the European Commission has warned that it will study the loan deal carefully to see if it breaches EU competition law.

Peugeot produces only 40 percent of its vehicles in France, and fellow EU members fear that the firm's foreign plants will bear the brunt of job losses.

"Yes it's possible that we could have compulsory redundancies," Peugeot chief executive Christian Streiff told the Financial Times after Wednesday's announcement of a 343-million-euro loss in 2008.

"It depends on the legislation in each country," he added.

In addition to five main sites in France, Peugeot has plants in Spain, Czech Republic, Slovakia, Italy and Portugal. Outside the European Union, it also produces cars and vans in Turkey, China, Argentina and Brazil.

France's second-largest carmaker Renault said Thursday it made an operating loss in 2008 and its 2008 profit was down 78 percent at EUR 599 million, boosted by contributions from group members such as Japan's Nissan.

Renault has also borrowed EUR 3 billion from the state, and expects to lose 9,000 jobs in Europe in 2009, around half of them in France, through voluntary redundancies and non-replacement of voluntary departures.

[AFP / Expatica]

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