French strikes to dent growth only if protracted

By Swaha Pattanaik

PARIS (Reuters) - French strikes which began on Wednesday will throw sand in the wheels of the economy if they drag on but should otherwise take no marked toll on growth.

Transport workers caused travel chaos on the first day of an open-ended strike called to protest against planned reforms of special pension privileges enjoyed by some public sector workers.

Hours of work lost due to the strike are quickly racking up as commuters face severe difficulties getting to work and some employees take days off to avoid the strike altogether.

With shoppers thinner on the ground, fewer staff to deal with customers and tourists deterred by the disruptions, firms are also counting the cost of lost business.

Still, economists say that it would take more than a few days of strikes for national economic growth to be affected. Some estimate that one week of mass strikes would be needed to shave 0.1 percentage point off quarterly growth.

"If the strike lasts a few days and then the pension reform gets done it will have an impact on a few specific sectors but not at a macroeconomic level," Nicolas Bouzou, analyst at Asteres consulting, told Reuters by telephone as he sat in a traffic jam trying to get to work.

"The strike would need to go on for weeks before there is a real risk that it will hit the confidence of business chiefs and prompt them to think about delaying investment."

The dispute centers on President Nicolas Sarkozy's plan to end so-called "special regimes" that let a few workers retire after 37.5 years of pension contributions compared to 40 years for everyone else.

DURATION THE KEY

French Economy Minister Christine Lagarde warned that a long strike could brake the buoyant pace of economic expansion seen in the third quarter, when quarterly growth accelerated to 0.7 percent from 0.3 percent in the second quarter.

"Any strike, if it lasts, disrupts the functioning of the economy and firms. The rebound in French growth could suffer as a result of that," Lagarde told Le Monde newspaper.

The head of French business lobby MEDEF, Laurence Parisot, was even more vehement, saying that it would be "catastrophe" if the strike lasted several days.

Parisot said this week's strike could knock some hundredths of a percentage point off French growth while the MEDEF branch for greater Paris said on its website that each day of strike meant 50 million euros ($73.30 million) of lost turnover in the region.

"You might be able to catch up a lost day of work in industry but in the service sector a day of work lost is lost forever and you can never claw it back," Jean-Francois Vessey, vice president of social affairs at the CGPME, the confederation of small- and medium-sized enterprises, told Reuters.

Still, economists said such losses would not begin to translate into a noticeable reduction at the level of gross domestic product as long as the strike was relatively short.