Cablegate: Election of New French Business Leader Hints At
This record is a partial extract of the original cable. The full text of the original cable is not available.
200953Z Jul 05
UNCLAS SECTION 01 OF 03 PARIS 005025
SIPDIS
SENSITIVE
STATE FOR EB/TPP, EUR/ERA, EUR/WE, EUR/PPD, DRL/IL AND
INR/EUC AND EB
COMMERCE FOR NAAS
DEPT OF LABOR FOR ILAB
DEPARTMENT OF COMMERCE FOR ITA
STATE FOR USTR
E.O. 12958: N/A
TAGS: ECON ETRD PGOV PREL ELAB PINR FR EUN
SUBJECT: ELECTION OF NEW FRENCH BUSINESS LEADER HINTS AT
LARGER SOCIAL AND ECONOMIC MAKEOVER
NOT FOR INTERNET DISTRIBUTION
SUMMARY
-------
1. (SBU) France's leading business association, MEDEF, on
July 5 elected Laurence Parisot, head of major French
pollster, IFOP, as its new president. Parisot is a first
for MEDEF, both in that she is the CEO of a cutting-edge
services sector business and a woman. MEDEF has long been
considered a conservative organization, dominated by
smokestack industry business concerns and patriarchal
bosses. As one of France's major "social partners,"
alongside labor unions and the government, MEDEF is key to
advancing social and economic reforms in France. Parisot's
election comes at a time of deep transition and dislocation
in France, with some commentators going so far as to suggest
that a long gestating crisis -- in France's governmental
structures, and its economic and social "models" -- may be
coming to head with the end of Jacques Chirac's 10 years as
president (current term ends in May 2007). In her
acceptance speech Parisot stressed MEDEF's commitment to
promoting the global competitiveness of France's economy,
and placed special emphasis on the importance of research
and innovation. Unabashedly pro-market and pro-business,
Parisot also reiterated MEDEF's long-standing calls for a
reduction in the tax, regulatory, social security burdens on
businesses. There is strong resistance to tampering with
the underpinnings of France's "social model," particularly
in government bureaucracies and labor organizations. If she
should be successful in catalyzing movement on these
neuralgic issues, Parisot will have to convince an
overcautious French political class and the public at large
that MEDEF is acting in the wider interest of French
society, something her predecessors have never succeeded in
doing. End Summary.
------------------------------
MEDEF: turning over a new leaf
------------------------------
2. (SBU) By putting at its helm a woman who established her
reputation as an business leader as the head of a major
polling firm, the French employers' association MEDEF
(Movement of French Entreprises) clearly signaled its
willingness to take a new direction. MEDEF's 750,000
members, comprising large as well as small-and-medium-sized
companies, sent a message to French society at large that it
intended to modernize. Laurence Parisot's victory is ground-
breaking in that it manifests the primacy of services over
industry, of newer, smaller businesses over older, larger
industries, and of a younger generation of salaried business
leaders over older, "captains of industry."
3. (SBU) The election of Parisot was far from a foregone
conclusion. She competed against former Economy and Finance
Minister Francis Mer and Guillaume Sarkozy, President of
MEDEF's federation of textile industries (and brother of the
Interior Minister and Presidential hopeful Nicolas Sarkozy).
However, Parisot is said to have benefited from the discreet
but active support of French President Jacques Chirac,
retail magnate Francois Pinault of Pinault-Pintemps-
LaRedoute, and Claude Bebear of the insurance giant AXA.
----------------
Parisot's Agenda
----------------
4. (SBU) In her acceptance speech, the new head of MEDEF
spoke of the need to make people "love the market economy" -
- a daunting challenge in a country where a range of leading
political figures, including President Chirac and centrist
politicians and labor leaders, regularly decry "Anglo-Saxon-
style liberalism." Parisot also talked of promoting
employment by bringing greater flexibility to the French job
market, simplifying the 600 article-strong French Labor
Code, cutting labor costs, and developing closer ties
between universities and businesses to prime the pump of a
knowledge-based economy. Parisot underlined that her
proposals tracked with the "Lisbon Agenda" -- the EU's
competitiveness priorities agreed to the EU heads of state
meeting in Lisbon in 2000. Parisot also intimated that she
might resurrect the MEDEF's 1999 "project for "social
renewal, which, at the time, led to a breakdown of talks
between the then-Socialist government, trade unions and
employers. Winning the public's support for a business
friendly approach to social and economic policy will be key
to Parisot's success, given her ambitious agenda.
------------------
Difficulties ahead
------------------
5. (SBU) An expert on French public opinion, Parisot takes
over at a time of deep-rooted economic and social malaise in
France, fuelled by unemployment at a five-year high of 10.2
percent. A poll jointly conducted by the economic magazine
"L'Expansion" and the pollster CSA in October 2004 shows
that outsourcing and relocation outside France is seen as a
"serious phenomenon" by 88 percent of the French population
and as a "lasting" one by 70 percent. A third of the
population further believes that they or someone they know
will loose their job. This is considerably worse than a
decade ago, when globalization was already perceived as
having a negative impact on employment in France. Many
French economists stress that the fear of relocations and
outsourcing is "irrational" -- for example, since both
together accounted for only for only 1 percent of job losses
in 2004, losses more than offset by the estimated 20,000
jobs created by foreign investment every year.
6. (SBU) Feeding the public's possibly exaggerated fears of
outsourcing, some left-leaning political parties and labor
organizations attempt to portray MEDEF as the vanguard of
"neo-liberalism," and the engine of job losses and economic
insecurity. Many "anti-liberal" sympathizers also opposed
the EU Constitution in the referendum on it, which took
place last May. The clear defeat of the proposed
constitution understandably buoyed those who opposed it,
possibly making them more combative in the upcoming debates
-- MEDEF leading the charge for liberal reform -- on
questions of economic and social policy (in particular, the
upcoming debate on unemployment benefits and the financing
thereof).
----------------------------------------
Upcoming debate on unemployment insurance
-----------------------------------------
7. (SBU) MEDEF's Directors for Social Affairs and for
Employment told us on July 13 that they believed the French
left's resistance to economic and social reform will likely
resurface in September, with the start of negotiations on
the future of the French unemployment insurance scheme,
among the last of the French welfare state's "third-rail,"
sacred cows. The financial situation of the principal
unemployment insurance fund (UNEDIC), jointly managed by
trade unions and employers, has worsened dramatically over
the past few years.
8. (SBU) The fund will face a deficit of between 13 and 15
billion Euros by the end of the year. This is a six-fold
increase compared to the deficit faced 3 years ago, when the
first cutbacks in benefits and increases in contributions
were agreed to. At the time, two trade unions, the one-time
Communist, (General Confederation of Labor) CGT and its off-
shoot, the sometimes more militant, but much smaller, CGT-
FO, refused to sign the agreement. They objected to the
"back-to-work assistance plan" (PARE), designed to speed up
return to the workforce by the unemployed, through greater
"supervision." MEDEF will be backing similar strictures to
cut costs this time around also; for example, MEDEF favors
tightening requirements for entitlement to unemployment
benefits, along with a series of measures to exert greater
control over an unemployed person's discretion to turn down
job offers.
-------------------------------------
Resistance to change may be weakening
-------------------------------------
9. MEDEF hopes that public attitudes towards generous
unemployment benefits may be changing as the character of
France's workforce changes -- becoming more youthful as baby-
boomers retire, with ever more frequent jobs changes, in an
ever more services-oriented economy. (This sea-change
includes a significant drop in trade union membership - now
at an all-time low -- from over 23 percent of the workforce
in 1978 to between 7 and 8 percent today. Today, France's
workforce consists of 7 million employees in the services
sector, as opposed to 5 million in industry, 1 million in
construction and public works, and another 5 million in
government jobs.) A recent poll by the CREDOC research
center shows that an overwhelming 84 percent of the French
population wants unemployment benefits curtailed and
"greater guidance" exerted over the unemployed to get them
back to work faster.
--------------------------------------
...but remains formidable nonetheless
--------------------------------------
10. (SBU) The opposition MEDEF foresees stems from
established, labor organizations seeking to sustain benefits
that protect their members, and from a renewed, leftist
populism that persists in demonizing business. According
MEDEF, French trade unions no longer react along predictable
ideological lines because they are no longer "politically
representative" bodies. This ideological void has been
filled by new (often distantly "Trotskyite inspired" groups,
such as SUD, Attac and LCR,) which are attracting new
members with their aggressive anti-globalization, anti-
liberalism stances. MEDEF is planning a sustained campaign
to educate the public about such issues as unemployment
insurance (and lay-off compensation) reform and labor code
reform, before pressing its positions with its union and
government "social partners." If Parisot -- an opinion
professional -- succeeds in swinging public opinion to
MEDEF's outlook on these issues, she will have accomplished
a goal, which was elusive to all her predecessors.
STAPLETON