FACTBOX: Challenges facing French president-elect Sarkozy

(Reuters) - Conservative Nicolas Sarkozy was elected president of France in a run-off vote on Sunday, according to television projections after polls closed.

Below are some of the main challenges that will face him.

PARLIAMENTARY ELECTION

* The new president forms a government on taking office but faces a test with a parliamentary election on June 10 and 17 that will decide whether his UMP party retains control of parliament or he is forced to "cohabit" with the opposition.

UNEMPLOYMENT

France's unemployment rate is the highest in the euro zone at more than 8 percent, despite steady improvements over recent months. Jobs were among voters' main worries. To encourage firms to hire more, Sarkozy plans to introduce a more flexible labor contract and will also allow unemployment benefit claimants to turn down no more than two job offers without losing benefits.

PURCHASING POWER

Along with jobs, purchasing power was one of the main preoccupations of the election campaign, despite relatively robust consumer spending in past months.

Sarkozy has pledged to allow people to earn more by working more. He will loosen rules on the 35-hour working week and exempt overtime from tax and social security charges for both employers and employees.

He plans gradual cuts in income tax and social security charges and will exempt mortgage interest payments from tax.

PUBLIC DEBT

Despite steady progress in cutting borrowing, France's public sector debt is still well above the European Union's limit of 60 percent of gross domestic product and debt payments are set to swallow some 41 billion euros in the 2007 budget.

The outgoing government succeeded in cutting debt to 63.9 percent of GDP in 2006 from 66.2 percent in 2005. Sarkozy has pledged to bring public debt below 60 percent of GDP over five years by limiting public spending increases to 1.5 percent a year and reducing the number of civil servants.

SOCIAL TENSIONS, IMMIGRATION

Tensions still simmer in France's deprived multi-ethnic suburbs, where rioting exploded in 2005 and where many resent Sarkozy's hard line on young offenders and immigration.

But many French are worried about integrating large numbers of immigrants from outside Europe and these concerns are often linked to worries over crime and security.