France's Economy – Before the Start of the EU Presidency

The small town of Domfront in Normandy mirrors the French economy as a whole. People here face increased living costs, which have risen by 3.4%, more than the EU average of 3.3% and of 2.6% in Germany. With the introduction of the 35 hour week, the manager of the local biscuit factory needed more staff, thus increasing costs. Our reporter Grit Hoffman went to Domfront to see for herself.

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Bildunterschrift: Großansicht des Bildes mit der Bildunterschrift:  Cows and apple trees – hallmarks of Normandy, France. The historic village of Domfront with its 4000 inhabitants lies between Paris and the English Channel. The relative isolation belies the fact that economic problems have long since made their way here – and sometimes seem even harder to solve than in the big city.

Bildunterschrift: Großansicht des Bildes mit der Bildunterschrift:  A fact Gérard Lebaudy is well aware of. He owns the local cookie factory. The family owned business bakes 150,000 cookies an hour – from regional specialities to diet cookies. Annual turnover is 20 Mmillion euros – but exporting the products is getting increasingly difficult Gérard Lebaudy says: "The Euro has made things very difficult – especially in southeast Asia with the Yen and North America with the dollar. We've been present in those markets for the past two years – but despite our efforts, we're not making much headway there. In the US we're doing a bit better."

Bildunterschrift: Großansicht des Bildes mit der Bildunterschrift:  Cookie prices within Europe have risen as well – as a direct result of increased grain and milk prices. A mid-sized firm like Lebaudy doesn't have as much leeway as larger competitors. This has added to his diificulties which began a few years ago when the left wing governement implemented the 35 hour work week in France. Gérard Lebaudy is unhapy about that: "35 hours – for the same salary. That increased our expenses by 10%. To offset the cost, we issued a contract which spread worker's time out over the year – to achieve a degree of flexibility."

Bildunterschrift: Großansicht des Bildes mit der Bildunterschrift:  In fact no one works a 35 hour week here – they all clock around 39. The 4 hours overtime are then saved towards time off. Christèle Génissel works at the cookie factory: "If you have a family and children it's a bit easier now to get to the doctors – and we have 5 weeks' vacation. If you save up, you can even get a week more."

Bildunterschrift: Großansicht des Bildes mit der Bildunterschrift:  Grégory Cordurie, the union representative in Domfront doesn't approve of overtime. He's pushing businesses to hire more people – and not dilute the 35 hour week regulation:

"In most cases, employees are forced to work overtime. Alright, they're compensated with vacation time, but people should be allowed to decide for themselves if they want to do overtime or not. They're often pushed into it when there's a lot of work to do – and then are made to take their holiday when there's less work at hand."

Bildunterschrift: Großansicht des Bildes mit der Bildunterschrift:  Closing time at the Cookie Factory. At least for Erika Leblanc. She and her friend Catherine want to do a bit of shopping – they've waited for the sales to save money. Life is getting more expensive in France. Consumer prices rose by 3.3% last year alone. Their diminishing purchasing power is upsetting the French. Erika doesn't buy much from large supermarkets anymore – opting instead for discount retailers. A few years ago, middle class French wouldn't have considered that a necessity. Erika Leblanc: "There are things that we consider a treat today – something unnecessary. For example, recently I wanted a piece of smoked sausage – it cost € 5.35 – for a small piece. I put it back and bought something else."

Bildunterschrift: Großansicht des Bildes mit der Bildunterschrift:  Filling her shopping bag cost her 80 euros – whereas she used to fill an entire cart for that amount. At the gas station, she now pays 1.40 euro for a liter of diesel. That really hurts – especially in rural regions: "There are no busses out where I live. The nearest train station is 40 kilometers away. So, if you don't have a car, you can't work, you can't get around. Out here in the country, you're forced to have a car."

Bildunterschrift: Großansicht des Bildes mit der Bildunterschrift:  Many French are facing the same difficulties as Erika. The restrictions are still bearable – for the moment. But rising prices give everyone cause to fear that their standard of living might soon vanish, forever.