ANALYSIS-Europe helps carmakers but can't halt labour drain

By Helen Massy-Beresford

PARIS (Reuters) - European governments have no choice but to rush out support measures for carmakers faced with a slump in sales, as the U.S. looks set to pledge billions of dollars of aid to help its Big Three.

While the aid packages may give states some leverage to limit short-term job losses, in the longer-term, they will not be able to reverse the trend of job erosion in favour of cheaper labour in emerging markets, analysts said on Thursday.

The European car industry employs 2.2 million people directly and around 10 million more in related industries and services. It is facing a deepening crisis as the worsening economic situation batters consumer confidence, with November car sales showing the biggest falls for decades.

Germany posted an 18 percent decline, leaving it on track for the worst year of auto sales since reunification in 1990.

Spanish car sales plunged almost 50 percent, the biggest fall in nearly 16 years, while French sales dropped 14 percent.

Governments have no choice but to help carmakers right away, or risk bankruptcies, factory closures and a spike in unemployment figures. Across Europe they are putting forward support plans on top of a 200 billion euro (173 billion pound) Europe-wide economic stimulus package which includes help for carmakers.

French President Nicolas Sarkozy on Thursday pledged a scrapping incentive for people switching to greener vehicles, as well as 1 billion euros in loan guarantees, as part of a 26 billion euro package to shore up the faltering wider French economy.

In the Netherlands, Mitsubishi Motors' Dutch manufacturing plant NedCar plans to make use of a government scheme, part of a 6 billion euro package to boost the Dutch economy. There, companies whose sales have fallen at least 30 percent can cut working hours while staff get partial unemployment benefits.