French unions, employers reach deal on labor rules

[January 12, 2013]  PARIS (AP) -- French unions and business leaders agreed Friday to loosen up some labor protections after months of negotiations seen as key to reviving the country's economy.

President Francois Hollande hailed the agreement Friday night and ordered his government to turn it into a draft law. But it's unclear whether the measures agreed upon will be enough to bring down 10 percent unemployment or revolutionize labor relations in Europe's No. 2 economy.

The government had championed the negotiations, arguing that the cost and complication of hiring in France is hurting its global competitiveness.

France's leading employers' group, Medef, said the agreement will make it easier and faster for companies to scale back staff during a downturn.

It will also make it more expensive -- and less attractive -- for employers to string workers on successive temporary contracts instead of offering a long-term job.

In a nod to union demands, it also includes easier access to new job training, and guaranteed access to supplementary health insurance for workers. France has universal state health care that covers basic needs, but many French workers also have supplemental insurance that allows more freedom of choice in medical care.

It will also give workers' representatives more of a voice in company boards.

Medef hailed the agreement, saying it would « reduce the length of procedures, reduce legal uncertainty, and contribute to diminishing the fear of hiring," especially for small and medium companies. Optimistically, Medef said the agreement "marks the beginning of a culture of compromise after decades of a philosophy of social antagonism."

The talks began in October among the five leading labor unions and three employers' groups. French media reported that the three more moderate unions signed on to Friday's agreement but the hard-line ones didn't.

Hollande, whose popularity has plunged because of his inconsistent handling of the economy, was hoping hard for an accord that would make Hollande's method of slow consensus-building -- instead of bold, top-down measures -- more credible.

[Associated Press]

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