* Unions, employers meet for labour reform talks
* France under pressure to overhaul rigid labour rules
* Unions say deal remote, time frame "unrealistic"
By Nicholas Vinocur
PARIS, Nov 14 French unions rejected a proposal
for labour reform from employers on Thursday because it failed
to improve job security, a sign that a deal seen as crucial to
reviving the economy is unlikely by the government's year-end
The Socialist government has pledged to submit a labour
reform to parliament early next year even if unions and
employers cannot clinch an agreement, but failure in the talks
would damage its credibility and strain relations with unions.
"As things stand at the moment, it will be very, very tricky
to reach a deal," said Agnes Le Bot, a negotiator for the CGT
union, France's second largest.
The government wants as many as possible of the five unions
involved in the talks to sign a deal to lend it political
legitimacy and reduce the chances that left-wing groups in
parliament will seek to water it down.
Three moderate unions are expected to cooperate but experts
say the signature of at least one of the two remaining hardline
unions is desirable. Given that the Communist-backed CGT is
unlikely to sign any deal, attention is focused on the FO union.
If a majority of unions oppose a deal, the talks will be
seen to have failed.
Pressure to rescue a declining industrial sector and revive
exports has pushed President Francois Hollande to undertake a
series of pro-competition reforms, including a 20-billion-euro
tax credit for corporations to ease their costs.
In addition to shoring up the economy, the competitiveness
package aims to reassure holders of French debt and its main
economic partner in the euro zone, Germany, that France's
ultra-low borrowing costs are justified.
Yet observers including credit ratings agency Standard &
Poor's and the International Monetary Fund say that France will
not regain a competitive edge unless labour rules are relaxed.
Echoing the concerns, an economic adviser to German
Chancellor Angela Merkel told Reuters last week that France was
now the euro zone's biggest problem.
Employers and analysts agree that highly protective labour
laws act as a brake on hiring and investment because companies
cannot adjust their wage burden easily during a downturn.
Calling for an "historic deal", the government has urged the
parties to conclude their talks by end-2012 with a view to
sending a draft law to parliament early next year.
"This time frame is unrealistic," said FO's Stephane Lardy.
"They must stop talking about historic deals and let us work."
Parties have fallen behind schedule, with a round of talks
on Nov. 22 cancelled and only four sessions left before
year-end, meaning the government may have to extend its
"There's an enormous amount of ground to cover," said
Bernard Vivier, head of the IST labour think-tank. "Some points
are extremely sensitive for unions and they won't concede
Employers want to change the regulations governing layoffs
by capping compensation and reducing the maximum period in which
workers can contest them to one year from up to five at present.
They also want to make France's standard permanent job
contract, the "CDI", more flexible.
Hardline unions CGT and FO say they will resist any dilution
of their legal powers to contest layoffs or changes to the CDI.
But the moderate CFDT - the largest - said it would consider all
options in exchange for greater job security.