French business faces job-creation hurdles

PARIS — Europe needs jobs, and French entrepreneur Daniel Joutard wants to create them, hiring more employees for his skincare products company. Yet he can’t take the risk — in large part because of France’s inflexible workplace protections.

The 37-year-old is among thousands of small- and medium-size business owners who will be crucial to helping France — like other countries in Europe — reduce a double-digit jobless rate, and ultimately shrink its hefty state budget deficit by bringing in more tax revenues.

Small- and medium-size companies made up over 99 percent of enterprises both in France and the EU more broadly, providing for about two-thirds of all employment, according to a study published in January for the European Commission. Crucially, across the bloc, these companies created about 85 percent of net new jobs from 2002 to 2010. France alone counts more than 3.4 million small- to medium-sized companies, defined as having up to 250 employees.

But businesses like Joutard’s 3-year-old venture, Ainy, say it is costly and complex to hire when times are good, and costly and complex to lay employees off when times are tough. And so they’re staying small, and not taking on any workers at all.

Ainy’s New-Age creams, hydration treatments and lip balms have gotten solid press reviews. Top-tier retailers have offered up prime shelf space. A former R&D chief at Chanel has joined up — lured in part by the fair trade ethos of the trans-Atlantic startup and curiosity about the plants it uses. Ainy also eschews patents, insisting that it is unfair to trademark the expertise and knowledge of the indigenous South American peoples that the company collaborates with.

It is a formula that has struck a chord with the French public — and business is good, with revenues doubling in 2011.

Joutard now has six employees, and half of his revenues come from outsourcing research for customers. In his lab, a white-smocked chemist blends creams containing extracts from exotic Andean plants like Sacha Inchi, whose seeds have anti-aging properties and high concentrations of Omega-3 and Omega-6.

“We could hire two or three more workers,” Joutard said, but adds: “Hiring becomes a risk — because once you have hired someone, if the business is not there, it’s complicated to keep that person busy.”

And even more complicated to let that person go.

“So we’ll only hire someone when we’re 100 percent sure.”

ASSOCIATED PRESS Daniel Joutard, director and founder of Ainy, displays nuts of Sacha Inchi plant from Amazonia during an interview with the Associated Press Thursday in Paris.