PARIS – Creating jobs in France is proving harder than expected.
The embattled Socialist-led government is making its second push this year to energize the labour market in Europe’s second-largest economy, after a top economic official called the previous plan “a failure.”
Although President Francois Hollande has made cutting unemployment the cornerstone of his tenure, the jobs market is in fact getting worse. Unemployment climbed to 10.4 per cent in the third quarter despite a package of payroll tax cuts for businesses earlier this year that was meant to encourage hiring.
Economy Minister Emmanuel Macron presented Wednesday a new bundle of policies that aim mainly to free up France’s notoriously inflexible labour rules and regulations
“Macron’s Law,” as the bill has been dubbed, has sharply divided Hollande’s own Socialist Party but drawn praise from France’s powerful business lobby, Medef.
“Everybody must accept to change what doesn’t work, what penalizes hiring and economic activity”, Prime Minister Manuel Valls told a press conference. “This bill is a proof that our country is able to change without giving up on its social model.”
One of the most controversial measures aims at relaxing rules on stores’ Sunday and evening opening hours, especially in tourist areas.
Former labour minister and emblematic Socialist figure Martine Aubry said she will fight the measure. Sunday “is a precious time that must be devoted to family and friends, volunteer organizations, culture and sport,” she wrote in a column published in Le Monde.
Other measures include removing some restrictions on new bus lines to increase competition with national rail operator SNCF; and opening up regulated professions such as notaries and auctioneers to greater competition.
The bill also calls for reforming France’s complex system of labour relations boards and from five to six billion euros worth of sales from the French state’s 76 billion-euro ($94 billion) holdings of corporate assets.
The French parliament will only begin debating the bill next month, but it’s already sparked controversy. Thousands of opponents were demonstrating in Paris Wednesday.
Macron is a former investment banker who Hollande brought in to government in August. Macron has been quickly thrust onto the front lines of France’s effort to create jobs — and save Hollande’s.
Owning up to his failure to meet a pledge to start cutting unemployment by 2013, Hollande said last month that if he still hasn’t succeeded in the next two years, he won’t run for re-election in 2017. The European Union, which has put France under surveillance along with a number of other countries for exceeding agreed limits to its deficit, forecasts France’s unemployment rate will remain above 10 per cent at least until 2016.
Hollande has blamed a lack of economic growth for unemployment’s continued rise. The economy is only forecast to grow 0.4 per cent this year and 1 per cent in 2015.
Macron himself said the government’s last big effort to relaunch the economy, the so-called Responsibility Pact, was a failure.
The pact announced in January aims to ease payroll taxes by up to 40 billion euros ($50 billion) by 2017. In exchange, companies were expected to hire. Business owners, however, argue the reforms don’t go far enough to reduce labour costs, and earlier this month thousands of business owners protested in the streets of Paris and Toulouse against taxes and regulations.
Sylvie Corbet in Paris contributed to the story.
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