French small business faces job-creation hurdles

PARIS (AP) -- Europe needs jobs, and French entrepreneur Daniel Joutard wants to create them, hiring more employees for his skin-care 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's 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.

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