January 27, 2014 / 5:06 PM / 5 years ago

Hollande promise broken as French unemployment rises

PARIS (Reuters) - French jobless claims rose a further 10,200 in December to hit a new record, dashing President Francois Hollande’s hopes of keeping his pledge to start lowering unemployment by the end of 2013.

Job seekers visit a National Agency for Employment (Pole Emploi) stand at the 9th job forum dedicated to recruiting in Nice, January 23, 2014. French jobless claims rose a further 10,200 in December 2013 to hit a new record, smashing President Francois Hollande's hopes of keeping his pledge to start lowering unemployment by the end of 2013. REUTERS/Eric Gaillard

Labor Ministry data showed on Monday the number of people registered as out of work in mainland France reached 3,303,200 last month, the largest total since records have been kept. It represented an increase of 0.3 percent over one month and 5.7 percent over one year.

Hollande has struggled to kick-start activity in the euro zone’s second-biggest economy and keep his oft-repeated promise to get unemployment falling by the end of last year.

There was limited relief for the unpopular leader, with signs that the jobless total grew much less quickly towards the end of 2013 than beforehand.

“Stabilization, which is what we have achieved, is not enough,” Hollande said during a visit to Ankara shortly before the figures were published.

Acknowledging that more needed to be done to get companies hiring, Hollande earlier this month announced a more business-friendly policy shift, with plans to give firms tax breaks if they commit to taking on workers.

He promised to phase out by 2017 some 30 billion euros ($41 billion) in charges companies pay to finance family benefits, on condition that they accept targets for hiring and investing in France.

However, employers and unions, which began talks on Monday over the plans, have voiced doubts that pinning targets on companies will spur them to create jobs.

NO QUICK TURNAROUND

In the latest sign of Labor market weakness, a union source said Airbus Group is preparing to shed more than 5,000 jobs. The bulk were in Germany, but more than 1,400 posts were on the line in France.

That is bad news because the aerospace sector, a major employer in the country, has been one of the rare industries in France that has seen strong demand in recent years while many other exporters have lost market share abroad.

With the jobless rate at nearly 11 percent, Hollande’s failure so far to tame unemployment has driven his ratings to record low levels for a president in modern France.

The Labor Ministry stressed that there had been a clear slowdown in the rise of unemployment over the course of 2013, with new jobless claims each month much lower towards the end of the year than they had been at the start.

Some 177,800 people joined the jobless register last year, down from 283,800 in 2012, the ministry said.

Economist Eric Heyer at the OFCE economic think-tank said that much of the improvement was due to state-sponsored jobs rather than a real recovery in the economy.

He added that Hollande’s tax break plans would not bear fruit until at least 2016, ruling out any quick turnaround in the Labor market.

“For the private sector to create jobs you need growth stronger than 1 percent, whereas the government sees growth of 0.9 percent this year,” he said.

Reporting by Leigh Thomas, Additional reporting Dominique Rodriguez, Pauline Mevel and Elizabeth Pineau in Ankara; editing by Mark John and Mark Trevelyan

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