The coronavirus pandemic could have profound effects on the way people work in modern economies but is unlikely to reverse the globalisation of industrial supply chains, according to Geoffroy Roux de Bézieux, president of the French employers’ federation Medef.
He said he expected teleworking — as practised by 5m French employees to avoid the spread of the Covid-19 virus — to continue on a large scale even after the crisis and to contribute to the “demetropolisation” of French life in favour of secondary towns.
“For 20 years all the wealth, all the jobs have been concentrated in metropolitan areas, obviously Paris but also other big cities,” he told the Financial Times in an interview. “People will live in Chartres or Orléans and work at a distance from there much more frequently. They have discovered that you can work from Chartres or Orléans pretty easily.”
The French economy — about a third of its output generated in the Ile-de-France area that includes Paris — is expected to shrink by nearly 10 per cent this year because of a two-month lockdown of the population and other measures taken to tackle the pandemic.
“What’s totally new is the voluntary slowdown of the economy,” Mr Roux de Bézieux said. “That’s something that has never happened in modern economic history.”
He said the crisis was “accelerating trends that already existed” before the pandemic began, including the shift to teleworking and moves to “reshore” strategic industries in Europe or France from Asia.
However, he said cost considerations were bound to limit the overall impact on supply chains that for many sectors are currently centred on China and its factories.
“We’re not going to reverse the development of major supply chains or completely throw out the globalisation baby with the bathwater,” he said. “There’s a desire to once again see manufacturing of some products in Europe or France, but immediately that runs up against the problem of cost.
“Sovereignty has a cost. Producing face-masks in France costs tens times as much, or is much more expensive, than producing masks in China, and that will be the same after Covid.”
Green activists accuse French businesses of trying to use the crisis as an excuse to shirk their environmental responsibilities, but Medef — which supports the idea of an EU border carbon tax to ensure a level regulatory playing field — insists it wants only to delay the application of some new French rules that will be hard for businesses to apply on schedule.
Mr Roux de Bézieux gave the example of the “circular economy” law that comes into force next January and will oblige restaurant owners to use recyclable products. He said there were supposed to be four months of consultations before the relevant decrees were issued but the nationwide lockdown had prevented the discussions happening.
President Emmanuel Macron’s government, which is seeking to woo green and centre-left voters, has in any case rejected any backsliding on such commitments. “I will yield nothing to those who want to back down on environmental norms and I have rejected any moratorium,” said Elisabeth Borne, the minister responsible for the environment.
European business has demanded and received hundreds of billions of euros of support from national governments and EU institutions to keep companies afloat in the aftermath of the crisis, and continues to make further demands.
One of the more surprising interventions came from Germany. Its main business body joined its French and Italian counterparts in a call this week for more “fiscal solidarity” in Europe, a stance which suggested support for a bigger German contribution to the recovery from what is expected to be the continent’s worst recession since the second world war.
“It is governments that have deliberately slowed down their economies,” said Mr Roux de Bézieux. “It is the responsibility of the governments to relaunch what they slowed down.”
French economic activity has been cut by nearly a third during the lockdown that began to be relaxed on Monday. However, mass unemployment such as that seen in the US has so far been averted by a generous “partial unemployment” scheme under which the state has temporarily paid the salaries of more than 12m private sector workers who might otherwise be laid off.
Mr Roux de Bézieux said French business bankruptcy figures for April were not significantly worse than normal, and the economy was picking up this week with the reopening of shops and construction sites, although some industries and business services had been hit by a fall in demand.
“The most urgent issue to tackle is to avoid an epidemic of bankruptcies, especially in small companies,” he said.
