PARIS: President Francois Hollande yeserday tied a promise to ease the tax burden on French companies to their readiness to invest in France and to hiring young and old workers, who have been hardest hit by high unemployment.
Aiming to make companies more competitive and cut unemployment now running at around 11 percent in France, Hollande pledged last week to offer some ¤30bn ($40bn) of cuts in labour charges and simplify regulations in return for more hiring.
Business groups have opposed fixed hiring targets.
In a New Year’s address to business leaders and unions yesterday, Hollande provided further details, saying that companies would have to commit to investing in France and would have to hire as a priority young and older workers in order to qualify for the labour tax break.
“Companies must commit to invest more in France and relocate their activities as much as possible at home,” Hollande said in a speech billed as the official launch of his so-called “responsibility pact”.
The government will hammer out detailed targets in the coming months in talks with unions and business leaders, due to start on January 27.
Hollande also urged employers and unions to present options by the end of this year on how to improve France’s notoriously brittle industrial relations. He suggested the creation of staff representative bodies with a say in the running of a company — a move towards German-style Mitbestimmung, or co-determination.
The attempt by Hollande to cajole business into more hiring through labour charge cuts is part of what commentators see as a more centrist stance being adopted by the president to revive the eurozone’s second-largest economy.
The shift in policy has been overshadowed in the past week by interest in Hollande’s private life following reports of an affair with actress Julie Gayet.
The “responsibility pact” recalls the 1998 “alliance for jobs” which Germany’s Social Democrat ex-chancellor Gerhard Schroeder launched with unions and business in his first term.
While that alliance produced only modest results in terms of new employment, analysts have noted that it prepared the way for the more sweeping labour market reforms in Schroeder’s second term, accredited with transforming the German economy.
Though French businesses cautiously welcome Hollande’s pact, they are wary about getting tied down to specific targets.
Reuters
