Peugeot job pact shows France's new labour detente


* Peugeot unions ink deal on wage, work-time concessions

* Accord part of broader trend toward dialogue, fewerstrikes

* Shift is part policy, part worker desperation -analysts

By Nicholas Vinocur

PARIS, Oct 24 (Reuters) - Unions at France's PSA PeugeotCitroen agreed on Thursday to freeze wages next yearin return for a company pledge to keep plants open, the latestsign of easier labour relations in a nation famed for strikes.

A view spreading among workers that such collaborative dealsare needed to save French jobs in an increasingly tough globaleconomy is a factor behind the trend.

The car maker, struggling to reverse years of decline, saidthe deal would save it 100 million euros ($138 million) a yearthanks to trade union concessions on wages, holidays and moreflexible working hours at dozens of plants in France.

The accord caps marathon talks launched in June as Peugeotsought to boost productivity at its French plants withoutprovoking strikes. It follows similar deals at industrial firmsacross France in a trend analysts say heralds fewer walkouts andmore cooperative, German-style industrial relations.

"Bit by bit, we're inching closer to the German system,"Antoine Solom, an expert on labour relations at pollster Ipsos,said of a German model of consensual union-employer ties citedas a factor behind the success of the euro zone's top economy.

"It will never be totally the same - the countries are toodifferent," he said. "But on the ground there is a real changetoward more consensus-driven unions and bosses too."

French unemployment is stuck at around 11 percent - comparedto 7 percent in Germany - and economic growth is mired below 1percent, frustrating Socialist President Francois Hollande, whowas elected last year after pledging to foster job creation.

Societe Generale analyst Philippe Barrier said new labouraccords were becoming unavoidable to prevent plant closures:

"What's changed is the economic context that makes it easierto obtain compromise, as unions have understood they are neededto maintain employment," Barrier said.

Data shows a sharp drop in strikes, with days of work lostshowing a four-fold decline between 2005 and 2011.


Peugeot is among many firms whose survival is in jeopardyafter a decade which saw the elimination of more than 500,000French manufacturing jobs. Its labour deal follows months ofconfrontation between unions and management at theAulnay-sous-Bois plant near Paris, due to close for good onFriday.

The new agreement also commits blue-collar workers among atotal of some 200,000 French PSA staff to more flexible shiftarrangements and temporary transfers to other plants.

Though critics see a threat to hard-won improvements inworking conditions, and note that pay freezes hurt consumerspending power, other firms have struck "competitiveness pacts"since new legislation came into force in May.

It obliges employers to negotiate before laying off staffbut also lets them make deals with union representatives, endingan obligation to seek the consent of each employee individually.

Conflicts still erupt but the flexibility has helped dealsat Renault, the French unit of Germany's Robert Bosch, tyre maker Michelin, plastics supplierPlastic Omnium and drugs firm Sanofi.

The new law also forces larger firms, with over 1,000employees, to share more information with unions and give themrepresentation on boards - a feature that echoes elements of themanagement-union relationships seen in German industry.

"Since this law came into came into force we've entered anew era," Arnaud Montebourg, France's Socialist industryminister, told Reuters. "This progress of social dialogue,toward compromise in companies, is for us a major positive pointof the past few months."


Analysts say the trend toward flexibility is underpinned bya number of policy changes which have, for example, curbed theimpact of strikes and made it easier to lay off employees.

Peugeot's rival Renault started to seek temporary wage andworking-time deals as early as 2008. Warning that it mightotherwise shift production to Spain, where pay is lower andterms tougher, Renault has since extracted permanent changes.

Automotive suppliers like Walor in northern France, withsome 100 employees, have since struck similar deals.

Often, the concessions are small. In Michelin's case, workers are being asked to accept less flexibility to choosetheir own hours. But even small changes mean overcominglong-held attachments to workplace practices.

Labour Ministry for figures for 2011, the most recentavailable, show the number of days lost to strikes per 1,000employees hit just 77, down from 318 six years earlier.

The change was stronger in the private than the publicsector, likewise in services versus industry.

Trade unionists have mixed feelings about the deals but manyacknowledge the alternative would be bigger job losses.

"The unions always have reservations about thesecompetitiveness pacts," said Serge Maffi of the SIA-GSEA tradeunion at PSA. "But given what's at stake, we decided to sign."

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