French President Jacques Chirac bowed to weeks of angry protests on Monday and scrapped a youth job law in a climb-down that undermined his prime minister and handed victory to opponents of the law.
Chirac's decision was a personal blow to Prime Minister Dominique de Villepin, who had championed the First Job Contract (CPE) as a vital job-creating reform of the French economy but who had seen his popularity slump as mass opposition grew.
The government U-turn over the CPE makes it unlikely France will attempt broader reform of its highly regulated labour market before 2007, economists said.
Villepin said in a television address he regretted that the strikes and street protests showed the CPE could not be applied but gave no hints about his own political future, on the line over his handling of the dispute.
"The necessary conditions of confidence and calm are not there, either among young people, or companies, to allow the application of the First Job Contract," Villepin said, adding he would open talks with unions on youth employment.
A protest march in Paris planned for Tuesday should show whether student anger over the contract has abated.
"Today is a defining victory but there are still many issues outstanding," said Bruno Julliard, who heads the UNEF student union. He was referring to other parts of the government's employment policies but did not spell out future student action.
Villepin had said the CPE would reduce youth unemployment of 22 percent. Lack of jobs is the country's number one political issue and a major reason for weeks of rioting in poor suburbs late last year.
The "easy hire, easy fire" CPE would have allowed firms to sack workers under 26 without giving a reason during a two-year trial period.
The prime minister's poll ratings plunged as opposition to the measure mounted, damaging his chances of becoming the ruling UMP party's candidate for president in elections in 2007.
"The president ... has decided to replace article eight of the equal opportunities law with measures to help disadvantaged young people find work," the presidency said in a statement.
Chirac and Villepin were careful to say that the CPE, part of a wider law on equal opportunities, was being "replaced" rather than repealed. Unions who opposed the measure, arguing it would create insecurity for young workers, declared victory.
"Perhaps we will drink a drop of champagne. This is an undeniable victory for a social movement," said Gerard Aschieri, secretary of the FSU union.
The new measures include increased financial incentives to employers to hire people under 26 who face the most difficulties in getting access to the labour market, Employment Minister Jean-Louis Borloo said in an interview with Le Monde newspaper.
That would apply to approximately 159,000 young people currently hired under government-subsidised job contracts and the cost to the government would be around 150 million euros ($180 million) in the second half of 2006, Borloo said.
The measures, financed by an increase in tax on tobacco, could be introduced in parliament as early as Tuesday, said a senior UMP deputy but there were doubts over further reform.
Comments
Comments are closed.