ADVERTISEMENT

Macron Calls on France Inc. to Help Calm Grassroots Anger

Macron Calls on France Inc. to Help Calm Grassroots Anger

(Bloomberg) -- President Emmanuel Macron is leaning on France Inc. to help address public anger focused on pay and living costs. Some large companies are heeding his call.

After four weeks of sometimes violent protests by an anti fuel-tax movement called Yellow Vests that morphed into a catchall for generalized French anger, Macron on Monday unveiled measures to calm things down.

The measures will cost the public coffers as much as 10 billion euros ($11.4 billion). The president also called on the private sector to do its part, asking that companies that are able to should offer employees a year-end bonus -- which would be tax free.

Publicis Groupe SA, Total SA, Kering SA, Altice France and Iliad SA were among companies that said they would give 1,000 euro bonuses or higher to some staff. Total also said it would raise wages by 3.1 percent. Banks are studying the feasibility of paying a year-end tax-free bonus and reducing fees. Telecommunications company Orange said it’s studying a potential “solidarity” bonus, adding that implementation will depend on what’s discussed in parliament this week.

France’s top bank executives, including BNP Paribas SA’s Jean-Laurent Bonnafe and Societe Generale SA’s Frederic Oudea, met Macron on Tuesday to discuss “concrete measures.” Executives of large firms from other sectors will meet with the president on Wednesday, his office said.

Supporting Clients

In France, street protests are often pivotal moments, and it’s not the first time that large businesses have been asked to soldier up. In 2008 and again in 2011, soaring oil prices pushed then-Finance Minister Christine Lagarde to ask Total and other oil refiners and distributors to help finance a tax rebate on heating fuel and gasoline.

For banks, as well as for most other businesses, Macron’s spending push is seen as supporting customers struggling to make ends meet as economies cool across Europe.

But any bonus, even if tax-free, will weigh on companies under pressure to control costs and seek revenue growth. It could especially hurt retailers, already hit by more than four weeks of protests and blockades. Violent clashes in downtown areas of major cities, including Paris, Bordeaux, Toulouse and Marseille, damaged hundreds of shops, hurting sales and potentially threatening the most fragile small businesses.

“Unfortunately, many companies are not in a position to offer the bonus,” said Francois Asselin, the head of the Confederation of Small and Medium-Sized Enterprises.

Margin Pressure

Finance Minister Bruno Le Maire has called the Yellow Vests a “catastrophe” in economic terms. In Paris, iconic department stores Galeries Lafayette and Printemps remained closed on weekend days that would have otherwise represented the peak of holiday shopping.

Telecom operators, retailers and financial institutions face acute investor scrutiny over their profitability. While banks such as BNP Paribas and Societe Generale can help by softening lending conditions for small business, mortgages have risen faster in France than in its neighboring countries and bank margins are already under pressure from low rates. Efforts, be it on staff wages or to help the most fragile clients, may imperil their 2020 targets.

“Not all companies will be able” to pay the exceptional bonus, said Geoffroy de Bezieux, a French entrepreneur and the head of the employers’ lobby Medef. “Those that are profitable should be able to do.”

To contact the reporter on this story: Fabio Benedetti-Valentini in Paris at fabiobv@bloomberg.net

To contact the editors responsible for this story: Dale Crofts at dcrofts@bloomberg.net, Geraldine Amiel, Vidya Root

©2018 Bloomberg L.P.