Wires

Peugeot CEO says jobs cuts an "internal matter"

By Alice Cannet

DOUVRIN, France, Oct 8 (Reuters) - PSA Peugeot Citroen's

restructuring is an "internal matter", the Frenchautomaker's chief executive told reporters during a factoryvisit by industry minister Arnaud Montebourg.

Philippe Varin's comment on Monday was a rebuff forMontebourg who had said he would wring concessions from thecarmaker in talks on its restructuring - Peugeot plans to cut8,000 jobs and close an assembly plant.

Peugeot, one of the carmakers worst hit by a market collapseand price war in Europe, announced the job cuts in July alongwith the closure of its Aulnay plant near Paris, in a bid tohalt mounting losses.

The government has said the plan was "unacceptable in itscurrent form" and asked for three-way meetings with the companyand unions, scheduled to begin on Oct. 25.

During the meeting, Peugeot will present the conclusions ofan independent report on its financial situation, Varin said.

"We will also give an update on the progress of the layoffsprocedure, which is an internal matter for the group between itsmanagement and staff representatives," he said on Monday.

Peugeot and domestic rival Renault have both saidPresident Francois Hollande should cut welfare charges onemployers, to make manufacturing more competitive with factoriesabroad.

Soon after his election in May, Hollande scrappedpredecessor Nicolas Sarkozy's "Social VAT" plan to finance a cutto welfare charges with higher sales taxes.

Louis Gallois, appointed by the government to examine thematter, was due to publish alternative policy recommendationsnext month.

Montebourg gave one of the clearest indications yet that thegovernment does plan to cut the welfare charges on labour,appearing to pre-empt some of Gallois's conclusions.

"I am proposing a win-win, a reduction of the socialcontributions weighing on production in return for investment,"the minister said. "This proposal will be part of the debatewith Mr Gallois."

The government is weighing financing alternatives that gobeyond higher VAT or employee contributions, he said. "There area lot of options on the table."

Union sources say ministers were looking to shift 30 billioneuros ($39 billion) social charges from employers to other taxbases.

Hollande, who has ruled out raising VAT sales tax oremployee contributions in the 2013 budget, could roll out asecond mini-budget mid-year to adopt competitiveness reforms.

(Additional reporting by Nicholas Vinocur; Writing by LaurenceFrost; Editing by Dan Lalor)

(laurence.frost@thomsonreuters.com; +33 1 49 49 56 83; ReutersMessaging: laurence.frost.thomsonreuters.com@reuters.net)

Keywords: PEUGEOT RESTRUCTURING/