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 French automaker's chief executive told reporters during a factory visit by industry minister Arnaud Montebourg.

Philippe Varin's comment on Monday was a rebuff for Montebourg who had said he would wring concessions from the carmaker in talks on its restructuring - Peugeot plans to cut 8,000 jobs and close an assembly plant.

Peugeot, one of the carmakers worst hit by a market collapse and price war in Europe, announced the job cuts in July along with the closure of its Aulnay plant near Paris, in a bid to halt mounting losses.

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

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

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

Peugeot and domestic rival Renault have both said President Francois Hollande should cut welfare charges on employers, to make manufacturing more competitive with factories abroad.

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

Louis Gallois, appointed by the government to examine the matter, was due to publish alternative policy recommendations next month.

Montebourg gave one of the clearest indications yet that the government 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 social contributions weighing on production in return for investment," the minister said. "This proposal will be part of the debate with Mr Gallois."

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

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

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

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

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