France struggles with worker shortages, supply chains as economy rebounds

Less than a year before France’s next presidential election, Emmanuel Macron’s chances of re-election will partly hinge on the strength of a rebound beginning to benefit some of France’s big industries, from luxury goods makers to energy exporters.

At an annual economic conference in southern France, some pointed to persistent labour problems, including a shortage of qualified workers, which had now been aggravated by the Covid-19 pandemic as bosses try to meet resurging demand.

The CEO of one major French manufacturer said that his company had 150 vacancies advertised at two French factories, and no resumes were coming in.

“The crisis may have anaesthetised people’s relationship to work,” he told Reuters on the sidelines of the Rencontres Economiques conference in Aix-en-Provence. But the recruitment problem was more global, the executive added, saying he had encountered similar problems in the United States.

As the outbreak spread across France early last year, the government rolled out one of the most generous state-financed furlough schemes in Europe while millions of office workers moved to working from home.

While people had at first enjoyed the experience, they had started to question their relationship with colleagues and their companies, the head of France’s postal service La Poste said.

“The end of traditional contracted labour is a real question on the table,” Philippe Wahl told one panel at the conference.

One company found that 20 per cent of its workforce was not even bothering to regularly log into the corporate computer network at the height of lockdowns, one senior executive said he had heard.

Nearly half construction companies, 41 per cent of service companies and a quarter of industrial companies are struggling to recruit workers, according to the Bank of France’s latest business climate survey.

More fundamental issues were at play than the Covid-19 disruption, some businesses argued. Ross McInnes, the chairman of aero engine and equipment maker Safran, said France’s school system needed fixing.

“All of our companies are struggling to recruit for jobs that are pretty well paid,” he told one panel discussion.

Macron, a former investment banker, was backed enthusiastically by many business leaders in the last election. He has since passed some labour reforms, making it easier to hire and fire staff.

Manufacturing and construction firms have the added headache of simply getting hold of materials they need to meet clients’ orders.

Half of French construction firms and 44 per cent of industrial companies were facing supply problems, with the rate as high as 70 per cent for carmakers, the Bank of France’s survey found.

“The supply chain is a total mess,” the French manufacturing CEO said, adding that his firm had 23 separate task forces set up to tackle specific sourcing problems whereas the norm was one or two. The bottlenecks could last until the end of 2022, he said.

A global shortage of transport ships and the metal containers they carry was making it difficult and expensive to receive material from overseas, forcing some to resort to flying in supplies at a higher cost, he said.

REUTERS