French President Emmanuel Macron. Picture: REUTERS/LISI NIESNER
French President Emmanuel Macron. Picture: REUTERS/LISI NIESNER

Paris — Emmanuel Macron began his presidency in 2017 pledging to send shockwaves through the French economy by making labour cheaper, more flexible and better skilled.

Two-and-a-half years later, business leaders in the region with the country’s lowest jobless rate are experiencing both the successes and shortcomings of the president’s ambitions. While it’s cheaper to hire, slow progress in training means companies can’t fully take advantage. On top of that, a myriad of provisions to increase flexibility — which Macron urgently adopted by decree early in his term — are largely unused.

The labour shortage is particularly acute for transport and logistics firm Groupe Mousset, based near Les Herbiers in western France, where unemployment is almost half the national average. CEO Frederic Leblanc has resorted to extreme tactics to woo workers, giving employees free shares in his company, a car for €1 a month, and personal coaching courses.

“If you’re not attractive, people pass you by, or they leave,” said Leblanc, who recently invested in a bus that tours around touting the merits of working for him.

Macron’s efforts in France are under scrutiny as a test case of  structural reforms, both their impact on growth and whether they come through quick enough to deliver an electoral return during the president’s five-year term. Unlike financial boosts from fiscal and monetary stimulus, they aim to alter the very fabric of an economy by reshaping education and training, and rewriting rules to change the behaviour of businesses and individuals. That can mean short-term pain before any payoff, a deterrent for politicians at the whims of the election cycle.

On Thursday, Macron will get a sense of French people’s appetite for more change when unions go on strike to protest his plan to overhaul the pension system.

Labour shortage

The reform blitz was designed to help labour-intensive manufacturers, such as those scattered across Pays de la Loire in western France. At toolmaker Loiretech, the deepening of payroll tax cuts that began under Macron’s predecessor gave CEO Marc Morel margin to hire. But efforts to boost the supply of skilled labour are only just kicking in, creating a mismatch in the market.

Part of the difficulty in France is the time it takes for reforms to trickle through and for companies and workers to use new opportunities

“It is extremely difficult to find machine operators and welders because there is an insufficient supply of trained people,” Morel said. “I’m even starting to have difficulties in the research department.”

The European Central Bank (ECB) is watching the progress particularly closely. After deciding in September to pump more money into the economy with interest-rate cuts and quantitative easing, it’s demanding more from governments to help their economies benefit from the loose policy.

In France, the speed of job creation indicates reforms are having an impact, according to Bank of France governor and ECB governing council member François Villeroy de Galhau. But unemployment remains above 8% at a national level, and it may be difficult to get it lower without a bigger changes.

“Too often we have tended to think that when a law has been passed, most of the work is done,” Villeroy said in an interview with newspaper La Croix last week. “It is essential that businesses and labour unions now get a hold on it to implement it on the ground.”

Part of the difficulty in France is the time it takes for reforms to trickle through and for companies and workers to use new opportunities.

Like others, boat maker Beneteau in the Loire region also struggles to find workers with the right skills. With demand picking up in the last two to three years, Beneteau has at times delayed deliveries because it can’t build yachts fast enough. But the company hasn’t decided yet if it will use Macron’s 2018 law on training to create its own centres to equip workers with boat-building skills.

“We are still in a period in which we don’t really know what will happen,” said Corinne Margot, head of human resources. “That businesses can create their own training centre is a magnificent opportunity. We’ve not done it yet, but we are thinking about it.”

At the Loire branch of state labour office Pôle Emploi, director Alain Mauny says the quality of training has already improved with a higher proportion of those on state-sponsored schemes finding work. Extra financing under Macron’s €15bn plan should further improve things. “It gives you visibility as you know how much you will have every year and you can invest in training that businesses really need,” Mauny said.

In the short term, however, the region is taking more innovative measures, including working with housing associations and local authorities to relocate unemployed people from other areas. Many of the measures for flexibility introduced by Macron are going unused. According to UIMM manufacturers union, not one company in the Loire region has used new flexible contracts tied to the duration of a project.

For Groupe Dubreuil, a family-owned conglomerate that employs 4,700 people, all the new measures for flexibility are more confusing than useful. It’s in the process of implementing new rules Macron introduced to merge various committees of employee representatives, and define the powers of the new committees.

“I struggle to tell you that it has benefits or impact on jobs. The only thing I can tell you is that it feels like it changes all the time,” said human resources chief Béatrice Laude. “We are still at a crossroads.”

Bloomberg