Franck Dattée is discovering how hard it is to keep his business going in the midst of a pandemic, however often the French government urges employers and workers to keep the economy moving.
“At the moment almost all our customers have decided to close their building sites,” says Mr Dattée, who normally has 50 employees doing electrical work for construction and providing security systems.
Unlike Italian prime minister Giuseppe Conte, who decided to close all non-essential businesses at the weekend to slow the spread of the deadly coronavirus, the French government has repeatedly called on companies to stay open and on workers to show up for their jobs even if they are not in essential services such as food supply.
“We have to continue to produce and to keep the country running,” President Emmanuel Macron said last week, two days into a nationwide lockdown that has stopped people from leaving their homes except to work, buy food or take a brief moment of exercise.
As the focus of the pandemic has moved from Asia to Europe and the US, governments are facing the toughest of choices: if they bring industry and construction to a halt along with the entertainment and travel sectors already shut down, the resulting recession could inflict lasting damage on their economies; if they do not, commuters and workers could fall ill and continue to spread the virus, prolonging the health crisis and the economic downturn. On Tuesday US president Donald Trump insisted that coronavirus would kill fewer people than a “massive recession or depression”.
“The calculation of time versus depth for the drop in GDP is not easy,” says Gilles Moec, Axa chief economist. “Down the road, if some more non-essential sectors close but you end up with a shorter period of disruption, you may not lose that much over the year.”
European countries wondering about the economic impact of measures taken to tackle the pandemic may look with some alarm at China. Last week, the Chinese National Bureau of Statistics released a series of poor economic indicators for the January-February period — the coronavirus outbreak began in the province of Hubei in mid-January. These included an unprecedented 13.5 per cent year-on-year fall in industrial output, and a 20.5 per cent drop in retail sales.
In February, President Xi Jinping said “large-scale lay-offs” should be avoided. State-controlled banks were instructed to continue to extend credit to struggling firms. Nevertheless, some economists now project that first-quarter growth could fall as much as 11 per cent year-on year. The Chinese government has not reported a year-on year decline in economic growth since 1976.
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Now, across Europe, difficult negotiations are under way between governments, employers, trade unions and workers — and hard-pressed doctors who generally favour the tightest lockdown possible to reduce pressure on hospitals.
One of the fiercest debates is in Sweden, where business people, scientists and newspaper columnists are arguing over whether the measures against the virus are worth the economic damage they cause.
In France, the government reached an uneasy truce over the weekend with employer groups in the construction sector, an important driver of the economy that accounts for 1.5m jobs and nearly 6 per cent of GDP, after labour minister Muriel Pénicaud had accused them of “defeatism” in telling companies to close.
The two sides agreed to continue operations “to avoid a complete stoppage of building sites, which would not only undermine the businesses involved but also the whole economic supply chain”. At the same time they said they would ensure measures were in place to protect workers — some of whom have exercised their “droit de retrait”, a French right to absent themselves in case of danger — and limit the spread of the coronavirus.
Housebuilders in the UK have complained that the advice of Boris Johnson’s government on whether construction sites should remain open has been muddled. In the absence of a clear message, Taylor Wimpey, one of Britain’s largest housebuilders, announced on Tuesday that it was shutting down all its sites.
In Spain, where building work and sales of everything from mattresses to sports equipment continues, the stand-off over the lockdown has pitted the central government against some of the regions.
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Quim Torra, leader of the Catalan regional administration, called for an Italian-style “comprehensive stay-at-home order”, saying that “workers providing key services should be the only exception”. Murcia in south-east Spain ordered “the total closure of the region except for minimal services”, but the central government, which has assumed emergency powers, said the decree had no legal force.
Nadia Calviño, Spain’s deputy prime minister for the economy, echoed French ministers in emphasising the need to “safeguard [labour] activity and employment so that there is an adequate base to return to growth when we leave this health crisis behind”.
Even Italy’s newly imposed economic shutdown is not absolute. Mr Conte said “we will slow down the country’s productive engine, but we will not stop it” as his government ruled that any business or factory that was not “strictly necessary, crucial or indispensable” must shut until April 3.
Trade unions said the measures were not strict enough to protect workers, and the Italian General Confederation of Labour threatened a general strike in defence of health. But Confindustria, the business confederation, wrote to Mr Conte to ask him to ensure essential supply chains and support services that allow companies to keep working were maintained.
While some big companies are cautiously maintaining or restarting production — Airbus announced a partial reopening of factories in France and Spain on Monday — the disputes over the level of economic activity are largely academic for many smaller employers, such as Mr Dattée.
He has no supplies of masks or sanitising gel for his workers, and the online systems to organise the government’s unemployment benefits for laid-off staff have been heavily congested.
“Businesses are waiting for clarification,” he says. “Right now we are in a state of total uncertainty.”
Additional reporting by Domitille Alain in Paris, Richard Milne in Oslo and Tom Mitchell in Singapore.
Source: Economy - ft.com
