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After Hermès and Chanel, both luxury conglomerates said they would maintain the employee’s salaries and would not take advantage of the financial aid programme offered by the French government.
Shortly after France entered lockdown on March 15, LVMH had allegedly started to add some employees on the government’s so-called “partial activity” scheme across its various businesses. However, as some big groups such as Total and Société Générale, and luxury labels Hermès and Chanel, said they would not to use such a scheme, so as not to weigh on public accounts, LVMH seems to have made a u-turn in accepting the government’s assistance.
Chanel, which suspended the production of luxury goods and closed two thirds of their stores globally, said they would maintain the salary of its 8,500 employees. The label is reported to have achieved €9.91 billion in sales in 2018, with sales up 12.5% in the year. Similarly, Hermès also said they would not use the state-funded partial unemployment scheme. Bruno Pavlovsky, President, Chanel, has estimated the company’s loss in revenue this year to be at around 15%. Kering expects the same.
In March, France announced a US$45 billion partial unemployment package to guarantee the salaries of employees during the COVID-19 crisis to avoid lay-offs. Companies forced to reduce or suspend work can apply for state funding equal to 70% of an employee’s gross salary, to a maximum of €6,927 per month.
Source: L’Usine Nouvelle/Financial Times