CHANEL SA, known for its quilted handbags and No. 5 perfume, plans to cut 200 temporary and fixed-term contract jobs after slumping demand brought growth to a halt this year, according to France's CGT labor union.

The layoffs represent about 10 percent of Chanel's workforce and will take effect today, according to a statement posted on the union's Website on Monday. Chanel had zero growth this year, according to the posting.

Luxury-goods makers are cutting costs as the global financial crisis hurts demand for even the highest-priced products, Bloomberg News said. LVMH Moet Hennessy Louis Vuitton SA canceled plans for a flagship Tokyo store this month. Industry sales may slide between 3 percent and 7 percent next year excluding currency movements, consulting firm Bain & Co estimated in October.

CGT representative Manuel Blanco said in the posting he was "concerned" about prospects for other Chanel employees even though the company has given assurances that no plans exist to fire employees with long-term contracts.

News of the layoffs also call into question plans to build a laboratory in Pantin, near Paris, the statement shows. Chanel spokewoman Veronique Perez said yesterday by telephone that she had no comment on the posting.