* Economists say labour reform key to economic revival
* Unions, employers at odds on crucial points of reform plan
* Talks likely to stretch beyond end-Dec deadline
* Hollande pressured from both sides
By Nicholas Vinocur
PARIS, Dec 20 Negotiations on labour reforms
needed to boost France's economic competitiveness looked likely
to be extended into next year on Thursday as unions and
employers struggled to meet a year-end deadline.
Socialist President Francois Hollande has urged the two
sides to reach a "historic" deal by Dec. 31 to fix dysfunctions
in the euro zone's second-largest economy: a rigid job market, a
complex labour code and fraught labour relations.
Hollande's push is seen as central to a wider drive to shore
up the economy, tackling politically explosive social issues
that generations of French leaders have avoided because of the
threat of union-led street protests.
To avoid a clash, Hollande has steered clear of trying to
dismantle the 35-hour work week revered by many on the left. And
a government roadmap for the talks made no mention of the term
"flexibility" reviled by hardline unions.
Yet the prospect of a deal to meet his ambitions appeared
remote as unions rejected a new set of proposals by employers,
saying it did not address their demands for short-term job
contracts to be taxed more heavily than long-term ones.
"I don't think we'll have a deal tonight," Jean-Claude
Mailly, head of the hardline Force Ouvriere union, told France
Info radio. "We'll need time to examine (a new deal draft)...
There may well be new negotiating sessions in January."
With plenty of ground left to cover, unions and the
government have played down the importance of a year-end
deadline and hinted that talks may to stretch into early 2013.
Labour Minister Michel Sapin said on Wednesday that "all the
conditions for an agreement" were present - though he did not
comment on the chances for a deal being struck in 2012.
Talks are still deadlocked over union demands to make hiring
on short-term contracts less attractive for employers by
imposing increased taxes or unemployment contributions.
While nearly four in five workers in France are employed on
iron-clad permanent contracts, the share of those employed on
short-term and temporary contracts is growing as companies turn
to such arrangements to lower labour costs.
"This is a precondition for the CFDT (union) - if it's not
in the text, there will be no CFDT," said Patrick Pierron,
negotiator for France's largest union.
The Medef employer umbrella association has so far rejected
the demand, saying small- and medium-sized businesses which tend
to use short-term contracts will suffer disproportionately.
Unions are resisting employer calls for more flexible
permanent contracts and for lowering legal barriers to firing,
notably by capping compensation and cutting the time frame for
workers to dispute their dismissal from five years to one.
Some economists say the talks are not ambitious enough, and
will fail both to tackle high labour costs dragging on French
exports and find the best balance between the inflexibility of
permanent job contracts and the insecurity of temporary labour.
If the talks collapse or fail to produce a genuine reform,
Hollande has said the government will impose changes through
legislation to be introduced in parliament in early 2013.
But sending a draft law to parliament without a deal signed
by unions and employers will expose Hollande to criticism from
both trade unions and his left-wing allies.