Hollande hits cautious note on labour costs France's socialist government has moved to damp expectations of "shock" action demanded by business to reduce high employment costs as it grapples with how to tackle the country's waning international competitiveness. Jean-Marc Ayrault, prime minister, on Monday convened the first of two ministerial meetings this week on labour reforms ahead of a much-anticipated report on competitiveness by Louis Gallois, former head of aerospace group EADS, due to be published on November 5. Mr Gallois called in July for a "competitiveness shock" based on a big cut in France's high labour costs. Although the government commissioned his report shortly afterwards, President François Hollande said on Friday that it "does not commit the government or the president." After Monday's meeting, Pierre Moscovici, the finance minister, denied media speculation that the Gallois report would be "buried." But he said the government would decide its own path to "put in place a competitiveness trajectory which will be ambitious, which will deal with all dimensions, both "cost [of labour]" and "non-cost."" Mr Gallois is expected to call for some €30bn in social welfare charges currently levied on employment to be shifted over several years on to direct taxes and partially financed by public spending cuts. Pressure for labour market reform from business, already upset by a big increase in taxes, also mounted when the European head of General Electric, the US engineering group, said the new government was "sending signals which do not encourage investment and which, viewed from abroad, do not put the country where it ought to be." Ferdinando "Nani" Beccalli-Falco, European head of GE, told the newspaper Le Figaro the company was watching closely what reforms the new government would make. "To be honest, France worries me a little," he said. We have no intention of reviewing [GE's existing operations], but the current environment makes us very cautious about our future investments in France. The intense debate over how to regenerate industry, meanwhile, prompted a sharp exchange between Arnaud Montebourg, the industry minister, and Pascal Lamy, the French head of the World Trade Organisation, over the former's call for a "Made in France" campaign that included him dressing up in a traditional sailor's sweater for a magazine cover. Mr Montebourg, an advocate of greater government intervention in the economic, and Mr Lamy, an economic liberal, represent the opposite wings of the socialist party. Mr Montebourg, who wants EU action to combat unfair competition from emerging economies, has championed moves to favour French-made products, appearing in a hooped Breton sweater and clutching a Moulinex food blender for a magazine portrait to make his point. Mr Lamy reacted by warning against "patriotic protectionism." The industry minister responded that Mr Lamy should "address the imbalance between industrial nations the better to defend French and European business." French total hourly manufacturing wage costs have risen from 10 per cent less than Germany in 2000 to 2 per cent higher today - and are 20 per cent higher than the eurozone average, according to Eurostat figures. Mr Hollande has said the cost of welfare should not weigh so heavily on employment. But there are strong concerns within government that shifting such a hefty chunk of welfare financing on to direct taxation, on top of big tax increases already instigated, would hit middle and lower income families and could tip the stagnant economy into recession. Ministers, trade union leaders, and some industrialists, argue that reforms to boost innovation, investment and training are more important to improve competitiveness. The government is also laying heavy emphasis on talks under way between employers and unions to reach a deal on German-style labour market flexibility.