French Government Tells Alcatel to Rethink Job Cuts

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When telecom giant Alcatel-Lucent S.A. (NYSE: ALU) announced Tuesday morning that it would cut 10,000 jobs and make other changes to cut costs, it could have been predicted that the company would get some push back. That came Wednesday morning.

The French Prime Minister said that the government wants to reduce the number of job losses in France, where Alcatel-Lucent said it would eliminate 900 jobs and replace another 900 employees through subcontracting arrangements or internal transfers. The government is asking the company to revise its plans, according to a report in The Wall Street Journal.

Firing people never has been easy (or cheap) in France, and a recently enacted law gives the government a role in approving job cuts at large companies like Alcatel-Lucent. The government last year delayed for months a layoff of more than 8,000 jobs at PSA Peugeot Citroën.

The most likely outcome of the planned Alcatel-Lucent job cuts is that restructuring costs will increase as the government and the unions force the company to pay more for the privilege of firing people.

Alcatel-Lucent shares opened up about 2% Wednesday morning, at $3.55 in a 52-week range of $0.91 to $4.02.