French President Francois Hollande on Tuesday offered French companies what he called “a responsibility pact” to tackle unemployment under which they would reap the benefit of lower labor taxes in return for hiring more workers.
“It is based on a simple principle: lower labor charges and fewer restrictions on their activity in return for more hires and more dialogue with trade unions,” Hollande said in a New Year’s address broadcast on national television.
Hollande did not specify how he would go about reducing labor charges, but it is a possibility that has been mooted under a wide-ranging reform of taxes already promised by his Socialist government for implementation during the remainder of his mandate through to 2017.
French corporate margins are among the lowest in Europe, partly due to the high labor charges needed to fund its generous welfare state.
Unemployment is stuck at around 11 percent, although Hollande — whose popularity ratings are at an all-time low for a president of France’s 55-year-old Fifth Republic — argues it has now hit a peak and is set on a downward curve.
“Of course the results are taking a while to appear, but they are there... I tell you again tonight: I have one priority, one goal, one commitment, and that is employment,” he said.
Pollsters say Hollande’s government runs the risk of a massive protest vote against it in European Parliament elections due in May.
Hollande also said he expected to come up with new proposals on Europe with German Chancellor Angela Merkel early in the year, without elaborating.
Meanwhile, home improvement stores will be allowed to open on Sundays, the government said on Tuesday, after a fierce debate over the country’s strict laws on trading on the traditional day of rest.
Retailers can only open on a Sunday under certain conditions — if they are located in a tourist or a high-density area, for example. Any shop selling food can operate until 1pm.
However, the rules have infuriated workers who want to work Sundays at a time of sky high unemployment, and drawn criticism that they are archaic and ill-suited to a time of economic hardship.
About 180 stores will now be able to trade on Sundays until July 1, 2015, to allow time for a revamp of the law, according to a decree published in France’s official journal and signed by French Labor Minister Michel Sapin.
They include Castorama and Leroy-Merlin, which made headlines in September last year when they rebelled against the ban and opened 14 of their stores to the public on a Sunday.
Sapin said the stores had pledged to implement measures to compensate employees working Sundays, including doubling their salaries.
Additional reporting by AFP