French carmaker PSA uses Macron reforms for 1,300 redundancies

French carmaker PSA

French carmaker PSA said Tuesday that it would make 1,300 people redundant under labour reforms pushed through by President Emmanuel Macron, the first big company to take advantage of the looser layoff laws.

Macron ran his campaign on a pledge to make businesses more competitive by making it less expensive to hire and fire workers, part of the former investment banker's push for a "French renaissance".

In September, he used executive decrees to shake up collective bargaining rules, overcoming the resistance of the far left and some labour unions.

Under the new rules, companies can cut jobs by offering voluntary redundancies instead of having to draw up a company-wide restructuring plan, which requires executives to prove financial difficulties.

Knowing that they can lay off workers with little ado is to entice employers to hire them more easily in the first place, the theory goes.

The goal is to cut a French unemployment rate currently at 9.2 percent, above the euro zone average of 8.7 percent and well above the 3.6 percent in neighbouring Germany.

Voluntary redundancies already existed before Macron's reforms, but only on a case-by-case basis.

French clothing retailer Pimkie also said this week that it would use the new rules to lay off 208 staff out of roughly 1,900 in France.

But PSA, whose brands include Peugeot, Citroen, Opel and Vauxhall, was the first major company to invoke the new rules ahead of a meeting with union leaders Tuesday.

PSA also plans to offer 900 early retirement plans, but said it would offset the redundancies by adding 1,300 permanent contracts this year and 2,000 apprentice contracts for younger workers.

"At least half of entry-level positions filled by the group?s former interns or work-study employees, with the hiring of at least 2,000 young people," the carmaker said.

The head of the militant CGT union, which led protests against the reforms in September, accused Europe's second-biggest carmaker after Volkswagen of a race to the bottom.

"The management at PSA wants to turn permanent contracts into unstable jobs, temporary work, etc.," Philippe Martinez told France Info radio.

PSA has to obtain the agreement of unions representing at least 50 percent of workers to proceed with the plan.

But for Martinez, executives now have the upper hand.

"I know that some directors at big companies will say 'It's either this or else I close a factory'," he said.

"We all know of a number of cases when volunteers are forced."