France plans to beef up labour reforms

[PARIS] The French government will press ahead cautiously with controversial labour reforms making it easier to fire staff, as it seeks to fight unemployment by making the job market more flexible, officials said on Tuesday.

Unemployment in French has stayed stubbornly above 10 per cent despite 2013 reforms making it easier for companies to make layoffs or reduce pay and working hours in downturns.

Only about half a dozen such work-time reduction deals have been agreed. Senior officials close to the discussion said some in the government believe that suggests conditions for implementing the agreements are too strict and that the terms should be renegotiated with unions and employers.

Some members of President Francois Hollande's Socialist administration favour extending the scheme to all businesses, even those not facing a downturn, which could also prove controversial.

As part of a law on opening up the economy, the government already plans to speed up labour courts, which can sometimes take more than two years to rule on disputed sackings.

The latest draft would impose a three-month cap on dismissal proceedings and set a tariff for compensation, to encourage firms and employees to agree compensation rates at the time of hiring and so avoid having to use the courts.

But the government will take a cautious approach, the officials said, as it does not want to jeopardize talks between employers and unions on a separate issue: how to ease threshold effects when a company passes a certain number of workers.

France's Ifrap think tank wrote in a recent study that removing the bureaucratic obligations that come when a company hires its 10th, 50th or 100th employee could create 140,000 jobs at more than 22,500 firms.

Employers have also demanded the government do more. "Employers are afraid of hiring staff in France," the head of the Medef employers' group Pierre Gattaz said recently. "We must dare to put on the table all the brakes to employment which have existed in France for years, if not decades."

REUTERS