Yet another blow for French president François Hollande today as IBM announces it will lay off 689 employees by the end of 2013, and a total of 1,226 by the end of 2014, 12.6% percent of its 9,730 staff in France. The president, who ran on a campaign of lowering the unemployment rate, has been surrounded by company layoffs in his first year in office, as the economic crisis begins to chip away at the French economy, which just re-entered recession this past quarter.
Laying off employees is quite tough in France – we’ve all heard horror stories about employees that just can’t be fired but refuse to work – namely because any amount of mass layoffs must first be declared and approved by a court that oversees enterprises. I won’t go into details about the dozens of different types of layoffs that exist – it’s all quite complicated, and my cofounder Trista knows much more about this than I – but needless to say that it takes a fair amount of well-paid employees to craft an optimal layoff plan, namely one that will be approved and will permit the company to lower operating costs the most with minimal suffering to revenue.
Many companies have been subtly accused of taking advantage of the European economic situation to lay off employees that they wouldn’t normally be able to get rid of – similar to how oil companies in the US took advantage of the crisis in 2008 to crank up oil prices, giving them record profits in the first year of the financial crisis. While I highly doubt that IBM falls into this category – they are one of the rare US tech companies that pays the same level of taxes as their French equivalent instead of offloading revenue in Ireland – there are some companies, French or otherwise, who have taken their employees hostage to get what they want from the French government.
Much like how the peak in gas prices in the US triggered a rise in electric car purchases, I hope that the rising layoffs by large tech companies will induce a change in attitude in the French government to provide a more flexible environment for startups to operate in.
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