January 27, 2014 / 3:05 PM / 4 years ago

Unions, employers wary as France launches hiring target talks

* Hollande offers firms 30 bln euros in tax breaks vs hiring targets

* Employer group opposed, says labour costs must come down further

* Unions sceptical that deal can be reached

PARIS, Jan 27 (Reuters) - French unions and employers hit out on Monday at President Francois Hollande’s plans to impose hiring targets on companies in exchange for a tax break as talks over his competitiveness push got off to a rough start.

The Socialist Hollande won support from Brussels, Berlin and financial markets for a reform drive unveiled on Jan. 14 that may be his last chance to defeat unemployment and stimulate growth in Europe’s second-largest economy.

In a shift to the political centre, he announced 30 billion euros ($41 billion) of tax breaks for companies by 2017, slashing labour costs in an effort to bolster squeezed margins and help them regain lost international market share.

But as parties met for a first day of talks, they appeared split over Hollande’s idea of setting “measurable” hiring targets for companies benefitting from the tax breaks, with most labour unions expressing scepticism.

“Nobody can force companies to hire,” said Jean-Claude Mailly, head of the hard-left Force Ouvriere union. “Counterparties in terms of hiring are only possible in exchange for specific subsidies, not a general policy.”

Hollande is trying to achieve two goals with his so-called “Responsibility Pact”: cutting France’s public deficit to 3 percent of output next year and bringing down the joblessness rate down from a record near 11 percent.

He faces pressure to bring the rate down quickly this year having made an optimistic-looking pledge to bring unemployment down during 2013. Despite billions of euros spent on subsidised jobs schemes last year, Labour Ministry data due later on Monday expected to show that joblessness continued to rise through the end of last year.

With unions already criticising the pact as a “gift to companies”, Finance Minster Pierre Moscovici urged business leaders to accept that they would have to show goodwill.

“Employers will have to accept the logic of a counterparty,” he said on France Info radio. “That’s fundamental, because if not the French will see it purely as a gift.”

Yet the chief of Medef, France’s main employers group, has already ruled out the idea of legally binding hiring targets for specific job sectors, arguing that companies would first need to evaluate their staffing needs in the event of an upturn.

After a meeting with Prime Minister Jean-Marc Ayrault, Medef boss Pierre Gattaz said labour costs would have to be slashed by at least 60 billion euros by 2017 if companies were to start hiring.

“That would be 35 billion euros of cuts on labour costs and 25 billion in lower taxes,” Gattaz said, adding that cutting costs by “a few billion” euros would not be enough.

Unions appeared divided, with only the moderate CFDT and smaller CFTC unions expressing optimism.

Three of five major unions at the talks must sign an agreement with the Medef in order for it to form the basis for legislation, which Hollande has said he wants to be sent to parliament in the second half of 2014.

Thierry Lepaon, leader of the hard-left CGT union, criticised the terms of talks which he said gave too much to the corporate sector, calling instead for a revision of billions of euros in existing tax breaks for companies.

“It seems as though the president and the Medef have not agreed on any counterparty to justify the 30 billion euros in new subsidies for companies,” he said. “We would have like to be part of this ‘deal’ they have agreed.”

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