Renault gains union OK to cut 7,500 jobs, freeze pay
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GENEVA (Bloomberg) -- Renault can move forward with eliminating 7,500 jobs and freezing wages as part of a labor deal offering increased domestic production, after one of the main unions at the carmaker gave their approval today.
"We decided earlier this morning to sign the agreement," Jean-Yves Sabot, head of the FO union's automotive branch, said. On Feb. 22, the CFE-CGC union also agreed to back the deal. The two represent about 45 percent of Renault employees. Under French law, a company needs the support of unions representing at least 30 percent of the staff for a collective bargaining agreement to be valid.
The carmaker said on Jan. 22 that it's willing to increase production in France by 15 percent once a labor deal is reached. Renault's French factories may build 80,000 more vehicles a year by 2016 to supply manufacturers that the French manufacturer cooperates with, including affiliate Nissan and Daimler, the carmaker said. Renault's current full-year production in France amounted to 530,000 vehicles for its own core brand in 2012.
The deal now enables Renault to reduce its French workforce 17 percent by 2016 through attrition. Labor leaders also agreed on a wage freeze for 2013 and to increase the average number of working hours. Annual savings from the cuts will reach 500 million euros ($652 million), Gerard Leclercq, head of Renault's French operations, said on Jan. 30.
In a next step, a meeting of the national works council will take place on March 12, Stephane Guilbaud, a Renault spokesman, said today in Geneva.
The CFDT and CGT unions, the other two of the four biggest unions, have not yet decided whether they will support the plan, Sophie Chantegay, a spokeswoman for the carmaker, said.
Deliveries drop
President Francois Hollande's cabinet today endorsed plans to revamp France's job market. The proposed law is based on a January agreement reached between French business leaders and three unions giving companies the right to reduce working time and salaries when demand slows while also extending medical and unemployment benefits and increasing taxes on short-term contracts.
Renault's global deliveries fell 6.3 percent to 2.55 million cars and light vehicles last year, with a 19 percent sales drop in Europe that was the worst among automakers based in the region. The manufacturer is working to increase its presence in emerging markets to reduce its reliance on recession-plagued southern Europe.
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