* Hardliners want French president to take unions' side
* Hollande has wooed unions since election in May
* Workers split ahead of crucial labour reform talks
* Moderate CFDT leader, breaks ranks, calls for faster
By Nicholas Vinocur
PARIS, Sept 5 Hardline French unions are
demanding President Francois Hollande back them, not employers,
at crucial talks on labour reform, forcing a potentially
damaging confrontation with little chance of a quick
Hollande has turned to business leaders for advice on how to
make French firms more competitive after spending months since
his election in May wooing unions with measures including a
minimum wage rise and a huge state-funded job creation plan.
But the business world's solutions - painful reforms to
lower wage costs and ease restrictions on hiring and firing,
which economists say are years overdue and needed to restore
market confidence - have soured the unions' view of Hollande.
"In the face of a worsening crisis, the government will have
to admit there are contradictory approaches - the employers' and
ours - and make a choice," said CGT head Bernard Thibault.
Tension between the rival camps is building ahead of the
talks, which may start as soon as October, with two hardline
unions threatening to boycott them.
"The government is going to have to spell things out
clearly," Jean-Claude Mailly, head of the FO union, said this
week. "Are they moving to satisfy the employers' demands, who
are forever demanding more, or are they going to take a step in
the direction of workers?"
A week before the government distributes a document to frame
upcoming talks on the labour market, Mailly has warned that he
will sit out if the word "flexibility" features on the agenda.
"Anything is possible," he said. "If conflicts must arise,
then they will arise - we will have given enough warnings."
CGT's Thibault said France should not follow Spain and Italy
in undertaking painful reforms because worsening joblessness had
proved them to be failures. Both countries have sought to water
down union privileges and make labour markets more flexible.
France has so far avoided such measures. But with a stalled
economy and unemployment at a 13-year high and rising, Hollande
is quickly running out of arguments to prove the euro zone's
second-largest economy deserves its ultra-low borrowing costs.
His push to fast-track the debate on the labour market,
originally scheduled for next year, suggests France may soon
follow Italy and Spain, but not without a struggle with unions.
"They are really not good examples," Thibault said. "In
fact, they offer an argument for why we should resist any
attempt to further deregulate the labour market."
Viewing labour relations as a zero-sum game, hardline French
unions including SUD, CGT and FO have a long history of
confronting reform-minded governments and winning.
In 1995, strikes forced former conservative Prime Minister
Alain Juppe to scrap welfare cutbacks designed to bring France's
budget deficit in line with Maastricht Treaty targets.
Ex-prime minister Dominique de Villepin fared no better in
2006 when he dropped plans to create an employer-friendly "first
job" contract in the face of massive student protests.
Spooked by such examples, Hollande's predecessor Nicolas
Sarkozy largely avoided conflict, except to face down unions
over a pension reform that left many of their privileges intact.
Hollande, however, may have no choice. France has already
pledged billions of euros for job creation schemes that
economists say may only bring a shallow improvement, and
budgetary contraints rule out further investment.
If Hollande does not prove he can take painful measures to
improve competitiveness, credit rating agencies say they will
carry out further downgrades, shaking confidence in French debt.
One sign of looming change is the rapid about-face of the
moderate CFDT union, France's largest, which has broken ranks
with the CGT and FO and is calling for reforms to happen
urgently, even sooner than Hollande's timetable.
A few months ago, CFDT leader Francois Chereque spoke in one
voice with Mailly and Thibault to say that high labour costs
were not a problem for France. He has now changed his tune.
"I am saying it clearly: the cost of labour is also a factor
in the loss of competitiveness," he told weekly le Journal du
Dimanche on Sunday. "We must start talks on the labour market as
soon as possible and conclude them as soon as possible."
Laurent Berger, next in line to lead the CFDT, said unions
risk being sidelined as change is already happening in factories
and workplaces, outside the framework of collective bargaining
agreements. He called Mailly's recalcitrance "childish".
At Peugeot PSA's Sevelnord plant in northern
France, he pointed out, three of four unions have agreed to wage
freezes and more flexible working hours, with only the CGT
abstaining. A similar deal has been done at Air France
Bypassing collective bargaining, allowing union leaders to
sign agreements with management in one company or worksite, is
likely to feature large in the upcoming labour reform talks.