When car sales go up, automakers add production shifts and when demand goes down, layoffs begin. This happens routinely in countries such as the United States and the UK. But this is not the case in France where the argument that workers should be laid off based on fluctuations in demand is widely rejected.
Politicians, union officials, and the French public were irked by PSA's announcement last week it would cut 6,000 full-time and temporary jobs even though it still expects to make a profit this year. The public's ire was further stoked when PSA announced the next day that it would spend 960 million euros on its Brazilian operations.
France's minister of labor, Xavier Bertrand, was blunt when speaking about PSA's plans.
"Jobs should not be something to be adjusted according to market demands," Bertrand said during an interview last week. "[Cost-reduction initiatives] must be justified and it is critical to support workers along the way."
Many people in the United States wrongly dismiss France as a "socialistic" country. Bertrand is part of the government of French President Nicholas Sarkozy, who has used many of the free-trade and market-driven labor policies of the UK and the United States as examples to follow. President Sarkozy is definitely closer to former President George W. Bush than he is to President Obama in the political spectrum.
But when it comes to protecting France's workers, and ultimately, the interests of French citizens, politicians on both sides of the political fence, not to mention union officials, are very sensitive about massive job cuts on French soil. Laws and statutes also make it very difficult to fire or layoff employees compared with the United States.
During the coming months as PSA details where and how the axe will fall in France, politicians will react. PSA's largest union, the CGT, will certainly not sit still, while union officials have already used "scandalous" and "unacceptable" to describe PSA's decision to cut jobs in France. (So far, specific strike actions have not been announced.)
PSA is expected to make the majority of the cuts in France where, most of its production is based. It certainly will not be easy for the company to complete the task.