French President Jacques Chirac on Monday decided to
scrap a controversial labour law, the so-called CPE, after weeks of
massive protests and demonstrations by students and trade-unions.
French President
Jacques Chirac
Mr. 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 had seen his popularity slump as mass opposition grew,
Reuters reports.
The government U-turn over the CPE makes it unlikely France will attempt
broader reform of its highly-regulated labour market
before 2007, some 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.
Chirac and Villepin were careful to say that the CPE, part of a wider law on equal opportunities, was being
"replaced" rather than repealed; "The president ... has decided to replace article 8 of the equal opportunities law with
measures to help disadvantaged young people find work," the presidency said in a statement, Reuters reports further.
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 (104 million pounds) in the second half of 2006, Borloo said.
The new measures, financed by an increase in
tax on tobacco, could be introduced in parliament as early as Tuesday, said a senior UMP deputy.
Secretary General
Jean-Claude Mailly
of Force Ouvriere union
"The question is whether this has signed away the possibility of reform in the longer term," said
David Naude, economist at Deutsche Bank.
Unions who had opposed the measure, arguing it would create insecurity for young workers, declared victory.
"The CPE is dead and buried. That means the goal of securing the withdrawal of the CPE has been achieved," said
Jean-Claude Mailly, secretary general of Force Ouvriere union.
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French President Chirac decides to scrap controversial labour law
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