* Draft agreement aims to make labour rules more flexible
* Govt to present labour reform law 'without delay'
* Two hardline unions refuse to sign
By Nicholas Vinocur and Yann Le Guernigou
PARIS, Jan 11 France's employer groups and main
unions agreed on a deal on Friday to overhaul rigid labour
rules, paving the way for new legislation early in 2013 and
bolstering President Francois Hollande's credibility as a
The agreement is well-timed for Hollande, who has been
struggling with low approval ratings linked to perceptions that
he is powerless to reverse a rising trend in unemployment, now
close to a 15-year high.
It will form the basis for legislation to reform the labour
market early in 2013 that should help firms adjust to downturns
in demand and limit costs in the event of layoffs, while
offering more job security to workers on short-term contracts.
"Tonight social partners have placed France at the top of
European standards in terms of labour market and social
relations. The deal they have struck is anything but
short-sighted," the Medef employers union said in a statement.
Three of the five major unions represented at the talks said
they would recommend signing the deal. Two hardline unions, the
CGT and FO, denounced the draft as a step backward for workers'
rights and said they would not sign.
In order for an accord to be considered valid nationally, a
majority of the five unions must sign it. A formal accord is to
be signed next week by the groups' executive boards.
However, economists commenting on previous drafts of the
deal said its impact would be less profound than the Hartz 4
reforms launched by former German Chancellor Gerhard Schroeder,
and it was unlikely to bring about a swift reversal in the
"Will this be sufficient to ensure a turnaround in the
unemployment trend by end-2013 as promised by President
Hollande? We think not," Societe Generale economist Michel
Martinez wrote in a research note before the deal was struck.
REFORM LAW 'WITHOUT DELAY'
Hollande, who announced earlier on Friday he was launching a
military operation in Mali to help the government there stem an
uprising by Islamist rebels, hailed the accord as a breakthrough
for all sections of the workforce.
"I have asked the government to prepare, without delay, a
draft law in order to transcribe accurately the legal changes
foreseen in the accord," he said in a statement.
With his approval ratings mired at about 37 percent and
jobless claims at a 15-year high, the deal boosts the Socialist
president's economic reputation as he leads a broad effort to
Reforms will help address concerns often cited by credit
ratings agencies that France's labour market is split in two,
with "insiders" on long-term CDI job contracts enjoying too much
job security while "outsiders" have too little.
Employers obtained concessions capping compensation for
layoffs, limiting the amount of time workers can dispute unfair
layoffs to 24 months from five years currently, and allowing
companies to cut wages and work time temporarily in a downturn.
For unions, the deal brings broader rights to complementary
healthcare insurance, more seats for worker representatives on
company boards as well as an increase in welfare charges paid by
employers on short-term contracts.
Eight out of ten new hires are on contracts of less than a
month and, nearly 25 percent of people aged 18 to 25 have no job
- compared with an overall unemployment rate above 10 percent.
The moderate CFDT union said the deal, which came after
three months of wrangling and two marathon negotiating sessions,
had brought "substantial" advances on its key demands.
However, the CGT and FO unions said they would inform
lawmakers about the deal's shortcomings and seek to prevent it
from becoming a law, raising the prospect of street protests.
"This deal effectively prevents workers from protecting
their rights ... It's entirely unacceptable and we'll do our
best to stop it," said CGT negotiator Agnes Le Bot.