Strike at L'Oreal over low wages

While the France-based cosmetics giant is announcing plans to improve its margins in order to secure future financial success, a significant proportion of the workforce are calling for salary increases. Between five and ten percent of the staff took part in the strike, amounting to more than six hundred individuals, according to press reports. Calls for annual wage increases ​ The strike was a protest against the company's failure to perform across the board wage increases since 2004, despite its positive financial results. Union representatives are calling for a nine per cent wage increase this year, to compensate for the lack of wage raises in the last three years. In addition they demand annual salary increases in keeping with inflation and a thirteenth salary month. L'Oréal officials state that the company has replaced the system of annual salary raises with an individual programme, dependent on personal contribution to the company and profit sharing, according to Liberation. This individualised programme has led to an average wage increase of 20.7 per cent in the last five years, more than twice the rate of inflation, according to the company. However union leader Georges Liarokapis told French newspaper Liberation that the profit sharing system was not sufficient to offset inflation and consequently the buying power of the workers was dropping. Furthermore, he objected to the profit sharing system which results in a one-time benefit paid in June, stating that increasing the monthly salary would be more beneficial. "Discussions are ongoing and taking place in a climate of mutual respect"​ a L'Oréal spokesperson told Dow Jones news agency. Positive 2007 results ​ Last week the France-based cosmetics giant announced positive results for 2007, boosted by success in emerging markets. Operating profit increased by 11.3 per cent to €2.8 bn for the year ending the 31 December 2007. In addition, sales growth was particularly strong outside of North America and Western Europe with international sales jumping 17 per cent for the fourth quarter. ​ Wider margins for future success ​ The company is optimistic for the future despite the uncertain economic climate and will be looking to improve its margins in order to secure future economic success. L'Oréal CEO Jean Paul Agon told investors that it expects to improve its margins by enhancing supply chain management - cutting the number of its buying offices from four to seven and studying targeted partnerships with suppliers to reduce costs.