French President Nicolas Sarkozy interferes to avoid Peugeot layoffs

French President Nicolas Sarkozy said on Thursday that French carmaker PSA Peugeot Citroen had pledged not to go ahead with a plan to lay off workers in France.

Union officials had said on Tuesday that PSA was preparing plans to cut 5,000 jobs in France with 2,000 coming from research and development, suggesting a higher proportion of layoffs in the company's home country than previously disclosed.

After a media and political storm, Sarkozy took it upon himself to speak with the company's chief executive, Philippe Varin. "I spoke with Philippe Varin and I can tell you that PSA will not have a layoff plan in France," Sarkozy said in a speech about France's FSI strategic investment fund.

"In particular, the 2,000 workers most directly concerned by this plan will be reassigned either within the company or outside of it, namely to suppliers," he added.

Sarkozy, who faces a tough battle for re-election in April, said that it was out of the question that PSA reduces research spending in France, where companies benefit from what he said is one of the most favourable in the world thanks to a tax credit for research spending.

Varin and Sarkozy were due to speak again on Thursday, but a statement was not expected. Peugeot last month said its core car making business would barely make money this year and announced 6,000 layoffs across Europe, including 1,000 manufacturing jobs and 2,500 contractor positions.

It said at the time that the other 2,500 job cuts would come mainly in sales, marketing, IT and R&D. PSA and rival French carmaker Renault repaid earlier this year 6 billion euros in loans that the government extended to them in 2009 to help them through the financial crisis and on condition that they keep jobs in France.

Source: Brecorder