Strikes, what cost for the French economy?

The question of the cost of strikes on economic activity systematically returns to each conflict, and economists are very bothered to answer concretely for the simple reason that strikes are not alike, in their form, their scale and their duration. As explained by Denis Ferrand, the director general of the Coe-Rexecode Institute of Business Conditions, this type of movement is “restive” to costing.

 

This strike, scheduled to last three months, comes at a time when there are some questions about general economic growth (international geopolitical uncertainties, the elusive Donald Trump, etc.). In France, household sentiment dropped slightly in the first quarter (increase in CSG for middle managers and retirees). It should not be that the machine jams.

 

The precedent of the great strike of 1995

The big strike of 1995 lasted three full weeks, from November 24 to December 15. That was 23 years ago, we now have the necessary perspective to draw some conclusions. The national economy lost at the time 0.2 GDP growth points (between 4 and 5 billion euros). But there was a cumulative phenomenon: the strike of 1995 came one month after a rise in VAT decided by the government Juppé (+ 2%) that had slowed down consumption of households. It is not possible to quantify precisely the full impact of the great mobilization of the time.

 

Some sectors more affected

In general, the impact of strikes is felt more on the blocking of the production system (disorganization of the value chain) than on a loss of real activity, except for sectors such as hotels or tourism: reservations are already down for the next few months.

 

And then there is rail freight. The fact that containers do not roll directly affects the supply of companies. In some cases, losses are not recoverable. A company, a merchant who does not receive his merchandise can not satisfy his client. It is a dry and direct loss. But in recent years, rail freight has declined significantly in favor of (private) road transport, which continues to operate during strikes, which limits the impact on activity. The most affected by the malfunction of rail freight include the delivery of cars and heavy industry (bulky raw materials), not services.

 

From April 3rd, the first company concerned is the SNCF: each day of strike costs him 20 million euros. The company really does not need that when the competition comes.

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