Friday, August 31, 2007

Powerful Women

Three French women come near the top of Forbes Magazine's list of the world 100 most powerful women: Michèle Alliot-Marie, minister of the interior, no. 11; Christine Lagarde, minister of the economy, no. 12; and Anne Lauvergeon, CEO of Areva, no. 14. The only other French woman on the list is no. 80, Maureen Chiquet, head of Chanel. Cécilia Sarkozy doesn't make it.


Le Point says that the Suez-GDF merger will be announced on Monday. Sarkozy will have gotten part of what he wanted, since Suez will cede 66 percent of its environmental operations--a condition agreed to by Suez CEO Mestrallet against the wishes of his board, which wanted to keep everything.

It will be interesting to see who buys what Suez sells. Will it be Veolia, whose CEO, Henri Proglio, is close to Sarkozy, a longtime UMP financier, and rumored to be involved romantically with justice minister Dati?

RIP, 35 Hours

Yesterday Sarkozy told the MEDEF that he wanted to "go much further in the direction of making the 35-hour week more flexible." François Hollande isn't going to give him any trouble: "Overall, the country has to work more. ... We can no longer say, 'We're going to restore the 35-hour week.'"

The new slogan on the left is "the freedom of flex time" (le temps choisi). "Work more" is now the national consensus. Whether it will be in order to "earn more" remains to be seen. The reduction from 39 to 35 hours was mandated to occur without loss of pay. That the return to longer hours is to be accomplished without increase of pay seems highly doubtful, since even Chirac termed the 35 hours an acquis social, and you don't ask people to give up what they've got without compensation unless you're looking for trouble. The very absence of specific proposals on the hard-core issues such as the single labor contract in Sarkozy's MEDEF speech suggests that he's not looking for trouble just yet. And all his talk of juicing "purchasing power" hardly suggests that what he has in mind for the economy is an exchange of wage restraint now in exchange for a larger share of anticipated growth in the future.*

The vague talk of purchasing power is going to have to eventuate in concrete proposals fairly soon, or people will begin to ask what cards Sarko is really holding. The MEDEF speech has already met with a muted reaction for its lack of substance. More had been expected. The first hundred days created the expectation that the second hundred would continue to translate campaign rhetoric into concrete legislation. Instead there was more campaign rhetoric, and more than one commentator compared the Jouy-en-Josas address to a standard Guaino-authored stump speech.

* Laurence Parisot claimed the other day that if you index "the cost of labor" in Germany and France in the year 2000 at 100, the German index now stands at 87, the French at 103, suggesting a significant loss of competitivity for French industry. A quick check with the US Bureau of Labor Statistics suggests that these figures are highly misleading, although Ms. Parisot doesn't say what she means by "cost of labor": is it "unit labor cost," "average hourly compensation," or something else? The proper measure is unit labor cost, a productivity measure, which decreased in France from 85.7 in 2000 to 84.1 in 2005, whereas Germany went from 103.3 in 2000 to 96.7 in 2005, according to the BLS. So Parisot is right that Germany did improve its competitive position, though not, I think, as much as she claims. German wage restraint is achieved through coordinated sector-level bargaining. Sarkozy has proposed that France move to firm-level bargaining, which would reduce coordination and likely lessen wage restraint.