This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS PARIS 000686 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR EB/TPP, EUR/ERA, EUR/WE, EUR/PPD, EB 
STATE PASS USTR 
COMMERCE FOR ITA 
 
E.O. 12958:  N/A 
TAGS: ECON EINV ETRD ELAB PREL EUN FR
SUBJECT: FRANCE - BUSINESS UPDATE 
 
 
NOT FOR INTERNET DISTRIBUTION 
 
¶1.  (U) This message contains a series of updates on French 
trade and business news. 
 
France's foreign trade deficit widened in 2005 
--------------------------------------------- - 
 
¶2. (U) France's trade deficit widened last November, leading 
many experts to conclude that France is heading for a record 
shortfall in 2005.  They predict that the deficit could be 
close to 25 billion Euros for the whole of 2005, an all-time 
record in the history of the French economy.  This 
deterioration in the French trade balance is one of the 
worst in the Eurozone.  In the 25-member EU, only Britain 
and Spain have bigger trade deficits.  French analysts 
diagnosed that the rising cost of oil imports alone did not 
explain the growing deficit.  Rather, they blamed France's 
weak exports, which they believe are too dependent on 
Eurozone markets and not sufficiently focused on more 
competitive sectors. 
 
 
Re-negotiating the 35-hour week 
-------------------------------- 
 
¶3. (U) A growing number of French subsidiaries of foreign 
companies are asking staff to work longer for no additional 
pay.  In doing so, they are abiding by a relatively new 
March 2005 law allowing employers to negotiate deals with 
staff to increase working time by 220 hours a year in return 
for better pay.  The first company to renegotiate working 
hours with its employees early last year was Bosch's French 
subsidiary, near Lyon.  Nexans, the world's biggest 
cablemaker, Eurodisney, Aerospace and Defense Group EADS, 
and most recently Hewlett-Packard have since followed suit. 
Recently, Hewlett-Packard agreed to reduce the number of job 
cuts proposed for its French sites from 1,240 to 940, in 
return for longer working hours.  That pressure is set to 
continue as France's main business organization MEDEF points 
to the example of neighboring Germany, where a growing 
number of workers have agreed to receive lower pay in the 
future, sometimes with longer working hours, in order to 
keep their jobs. 
 
Outsourcing: a local matter? 
---------------------------- 
 
¶4. (SBU) An unusual initiative to monitor outsourcing and 
deal more effectively with its local social and economic 
consequences was taken late last year: a new inter- 
ministerial committee on local competitiveness or CIACT 
("Comite Interministeriel d'Amenagement de Compeititivite 
des Territories) was established to cover all aspects of 
local economic development.  For example, CIACT will be 
responsible for analyzing the consequences of technological 
changes or changes in regulations on the competitiveness of 
local businesses.  CIACT will also identify future regional 
pockets of unemployment or economic growth in order to 
assess local needs for training.  While responsible to the 
Ministry of the Economy Finance and Industry, CIACT's 
novelty lies in its search for local answers to local 
problems.  It is part of a trend begun under the last 
(Raffarin) government to give more "economic" powers to the 
regions and departments.  Job search and unemployment 
benefit distribution have already been brought down to the 
departmental level.  A better assessment of local economic 
needs is but the latest step in that direction. 
 
 
Reduced sick leave generates unexpected savings 
--------------------------------------------- -- 
 
5 (U) As part of on-going efforts to cut health insurance 
spending, the French Government recently announced that 
savings generated as of the end of October 2005 stood at 
nearly 600 million euros.  The drop in sick leave 
unexpectedly accounted for two thirds of the savings.  The 
savings, although lower than the 1 billion euro originally 
forecast, is welcome relief, since the non-discretionary 
public health care budget deficit has aggravated GOF budget 
problems, and could be expected to continue to put pressure 
on the rest of the central government budget. 
Stapleton