Is France hobbled by labour?

An American businessman rebuffed advances from the French, and said you would have to be stupid to invest in a nation of socialist slackers. Does he have a point? Simon Wilson investigates.

An American businessman rebuffed advances from the French and said you would have to be stupid to invest in a nation of socialist slackers. Does he have a point, asks Simon Wilson.

What's the background?

Despite his now-famous comments about French workers (see below), Maurice Taylor's American company Titan tried for several years to buy part of the struggling Goodyear tyre factory in Amiens, 75 miles north of Paris.

Titan wanted to downsize and focus on heavy-duty tyres for farm vehicles. But Taylor claims the talks failed because the French unions continually made unreasonable demands, backed at every stage by the government.

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At the end of January, Goodyear announced that it was finally closing the plant, with 1,250 job losses, and Arnaud Montebourg, minister for French industrial renewal, wrote to Taylor suggesting that he resume talks on a partial buy out.

But the American wasn't keen?

Notably unkeen. In a private letter that subsequently found its way into the French press, he wrote: "Sir, your letter states that you want Titan to start a discussion. How stupid do you think we are? Titan is the one with the money and the talent to produce tyres. What does the crazy union have? It has the French government."

Taylor, it seems, had already visited the factory in question "a couple of times. The French workforce gets paid high wages but only works three hours. They get one hour for breaks and lunch, talk for three and work for three. I told this to the French union workers to their faces. They told me that's the French way!"

As a result, said the American, Titan would instead buy up a "Chinese tyre company or an Indian one, pay less than one euro per hour and ship all the tyres France needs. You can keep the so-called workers."

Who exactly is Maurice Taylor?

Maurice Taylor is a small-government right-winger who ran for the Republican presidential nomination in 1996 on a Tea-Party-type platform, secured 1% of the vote, and has since carried on buying up dying corporations and turning them round. His combative style can be divined from the title of his book, Kill All the Lawyers and Other Ways to Fix the Government a title that won't have helped endear him to Mr Montebourg, a lawyer.

In response to Taylor's missive, Montebourg retorted that 20,000 foreign companies operate in France including 4,200 American subsidiaries employing nearly half a million people and they find they can deal with all the workshy French just fine.

"Far from your statements, which are as ridiculous as they are nasty, all these businesses know and appreciate the quality and the productivity of the French", he wrote, noting that France's ratio of foreign investment to GDP stands at 39%, compared with 23% in America and 20% in Germany.

Does Taylor have a point?

Not when it comes to the productivity of French workers, according to Howard Davies (the ex-CBI and FSA boss who has now decamped to Sciences Po in Paris). Yes, the French choose to work fewer hours than many comparable nations: 16% fewer than the OECD average and 25% fewer than in industrialised Asian countries.

But when it comes to output per hour, a standard measure of productivity, they put many nations to shame, including Britain. In fact, France's productivity per hour is about 15% higher than Britain's, on a par with Germany's, and ranks seventh out of 34 OECD members (rich industrialised nations) overall.

How do French workers compare with the Americans?

A study by UBS, a bank, from 2009, put output per worker per hour at $25 for France and $24.60 for America. A different study from 2011 measuring output per citizen per hour found a similar parity; $57 for France and $60 for the US. In other words, the French might prefer to work fewer hours, but they get a lot done. The statistical evidence, says Davies, "certainly does not suggest that French workers when they are on site are on a permanent coffee break, or drinking a ballon de rouge behind the bike sheds".

Where Mr Taylor certainly does have a point is when it comes to the mass of restrictive labour laws that penalise hiring, making French labour expensive ($46 per hour compared to $30 in America, according to The Washington Post), leading to higher unemployment and a decline in competitiveness.

What's the answer?

The national outcry against Taylor (he tried to calm things down by telling interviewers that he loved France's "beautiful women and great wine") suggests that he struck a nerve.

President Franois Hollande is due to publish legislation in March that would allow firms slightly more leeway to lay off workers and cut working hours and wages during a downturn; whether he can get even his modest proposals through parliament is another question.

Creeping realism in France

Compared with most EU countries, France has far more restrictive labour and product regulations and the eurozone's most burdensome taxes on employing people. New firms are rare, and it has markedly fewer small-to-medium firms than Germany, Italy or Britain a key factor in its high unemployment rate of 10% (25% of young workers). Despite the national outcry over Maurice Taylor's remarks, there are signs within thegovernment of a creeping realism as the downturn deepens.

Following a damning report on French competitiveness by industrialist Louis Gallois, President Hollande announced €20bn of tax breaks for firms employing low-wage labour to offset high social charges, and his government for the first time acknowledged the role of uncompetitive labour markets in France's relative decline over the past ten years.

Simon Wilson’s first career was in book publishing, as an economics editor at Routledge, and as a publisher of non-fiction at Random House, specialising in popular business and management books. While there, he published, a bestselling classic of the early days of e-commerce, and The Money or Your Life: Reuniting Work and Joy, an inspirational book that helped inspire its publisher towards a post-corporate, portfolio life.   

Since 2001, he has been a writer for MoneyWeek, a financial copywriter, and a long-time contributing editor at The Week. Simon also works as an actor and corporate trainer; current and past clients include investment banks, the Bank of England, the UK government, several Magic Circle law firms and all of the Big Four accountancy firms. He has a degree in languages (German and Spanish) and social and political sciences from the University of Cambridge.