French civil unrest threatens business disruption

French civil unrest

Civil unrest is significantly more disruptive to business in France than in any other western economy, suggests a global index compiled by risk consultancy Verisk Maplecroft.

The Civil Unrest Index (CUI), which ranks 198 countries around the world, rates France as ‘high risk’ alongside emerging markets, such as Brazil and South Africa. The top three countries where the civil unrest threat is deemed as most extreme are Syria, the Yemen and Libya.

The CIU measures triggers for unrest: the frequency and severity of mass demonstrations and protests: the effects on business; and the mechanisms in place to avert disruption. France’s deep-rooted culture of political protest and strikes has seen the country ranked 16th most at risk globally in the latest quarterly CIU out of the 198 ranked.

civil-unrest-2016

As companies assess the viability of relocating European headquarters from the UK following the Brexit referendum, the findings offer an insight into some of the structural problems facing business in France.

The country features among emerging markets such as India (4th), Mexico (7th), Nigeria (10th), South Africa (13th), Argentina (15th) and Brazil (21st). The only other Western European country to feature in the worst performers was Greece ranked 25th, while Italy (77th) is the next highest.

Maplecroft comments that Brazil, France, India, Mexico and South Africa, which have all witnessed substantial disorder in the last year, evidently lack adequate structures to avoid grievances escalating into wholesale protests.

While France has an active civil society and trade unions, these tend to encourage demonstrations. In contrast, Germany (ranked equal 140th with the UK and ‘low risk’) has a more consensual political culture that supports close cooperation between trade unions, industry and government, so protest is less likely to be an option of first resort in labour disputes.

In 2016 so far, France has experienced significant protests on a weekly basis, in comparison to Germany and the UK where unrest that markedly disrupts business occurs on average every six months.

Attempts to reform the country’s labour laws, designed to address France’s lacklustre economic performance, have driven the most disruptive protests over the last quarter. Illustrating this was an effort to prevent the implementation of a new labour law by workers from the General Confederation of Labour (CGT) union in May 2016.

The union blocked fuel depots and six of France’s eight refineries, which saw a third of petrol stations running on empty and the government forced to dip into the country’s strategic reserves. Significant disruption to transport infrastructure in France is also commonplace. In June 2016, railway operator Société nationale des chemins de fer français (SNCF) announced that strikes and protests were costing the company between €15m and €20m per day.

“As we’ve seen in South Africa and Nigeria, poor economic performance is also a critical bellwether for the likelihood of civil unrest,” said Maplecroft’s principal political risk analyst Charlotte Ingham. “In addition, widespread political and ethnic discrimination or corruption can inflame popular discontent and trigger significant events.”

In 2016, corruption has been the catalyst for the biggest protests seen so far. Brazil’s Lava Jato bribery probe brought the public out into the streets in their millions, causing major disruption to business in the country’s commercial centres.

171 views

Related reading

flag
blockchain-digital-identity
trump-and-clinton
ap_moller_maersk