Why does France have so many 49 employee companies?
Companies say the biggest obstacle to hiring is the 102-year-old Code du Travail, a 3,200-page rule book that dictates everything from job classifications to the ability to fire workers. Many of these rules kick in after a company’s French payroll creeps beyond 49.
Tired of delays in getting orders filled, Pierrick Haan, CEO of Dupont Medical (not to be confused with chemical company DuPont (DD)), decided last year to return production of some wheelchairs and medical equipment to France. The 150-year-old company, based in Frouard in eastern France, created 20 jobs making custom devices at a French plant—and will stop there. Faced with France’s stifling labor code, Haan probably will send any additional production of standard equipment to what he calls “Near France”—Tunisia, Bulgaria, or Romania. “The cost of labor isn’t the main problem, it’s the rigidities,” Haan says. “If you make a mistake in your hiring plans, you can’t correct it.”
See the complete article from Business Week.
It appears France has over 10% chronic unemployment.
50 is also a magic number for bringing a business under many regulations here in the US. Any company that expands its workforce to 50 or more employees will have to contend with numerous additonal mandates. Depending on the industry, that fiftieth new hire may require an additonal four or five just to comply, not to mention legal advice to be sure no regulation goes un-noticed.