* French govt to unveil competitiveness package at 1000 GMT
* Plans to cut labour costs, encourage investment spending
* Govt seen steering clear of 'shock' treatment
By Nicholas Vinocur
PARIS, Nov 6 President Francois Hollande will
unveil measures on Tuesday to revive France's struggling
industrial sector and make its exporters more competitive,
although critics say that the package falls short of much-needed
The Socialist government will outline proposals around 1000
GMT which are expected to focus on lowering labour costs,
fuelling corporate investment and helping small- and
medium-sized businesses flourish through fiscal incentives.
The package is to draw on the conclusions of a
government-commissioned report by industrial Louis Gallois that
prescribes cutting 30 billion euros ($38 billion) off payroll
taxes and compensating with spending cuts and higher consumer
Finance Minister Pierre Moscovici said the government would
apply most of the report's 22 proposals, spreading them out over
its five year term to avoid a sudden jolt in taxes that might
hit households and crimp consumer spending.
"I have always said that what the French economy needs is
not a shock but therapy, a deep therapy, a drawn-out therapy,"
he told BFM TV late on Monday, adding that plans were designed
to preserve buying power.
But employers have already expressed disappointment, arguing
that measures widely leaked in French media are less ambitious
than the shock therapy they had advocated.
Le Point magazine reported on Monday that the government
would grant 20 billion euros in tax credits to firms, in
exchange for guarantees that they will keep jobs in France.
Also, sales tax could rise to 20 percent from 19.6 percent.
"It would really be a mistake to say that we, the
government, will decide what you, the companies, are meant to do
with reduced labour costs," Laurence Parisot, head of the Medef
employers' group, told BFM TV.
"Only companies can make the best choice, so we need to give
them enough room to manoeuvre and trust them."
With his approval rating as low as 36 percent, Hollande has
dampened hopes for a jolt to the economy, ruling out a heftier
hike in sales tax that his predecessor Nicolas Sarkozy had
proposed as a way of easing high labour costs for employers.
Yet he promised "strong decisions" for France, vowing to
shore up an economy which has fallen behind competitors in the
past decade with a trade deficit of 70 billion euros in 2011
against a surplus of 158 billion euros for Germany.
German unemployment is at 6.9 percent against 10.2 percent
in France, which has lost 750,000 industrial jobs in a decade,
while French industrial margins have slid as Germany's soared.