Seeking to reduce France's high unemployment rate, President Francois Hollande has called for a "responsibility pact" with businesses that would reward companies that hire more people with lower taxes and greater flexibility, the New York Times reported.
"There is but one objective, one priority, one engagement, and that's employment," Hollande said in his New Year's Eve address to the nation.
He did not offer any details about the proposal. The idea of the pact "is founded on a simple principle," Hollande said. "Lower employment costs and fewer constraints on business activities."
In return, businesses must step up with more hiring and greater willingness to work with employees to reduce layoffs, he said.
Due to nationwide tax protests, Prime Minister Jean-Marc Ayrault responded in November by saying that he would lead an overhaul of the system, which he said had "become very complex, almost unreadable."
According to the Times, France's hourly labor costs are among the highest in Europe, owing in part to employer-borne social charges that on average add nearly 34 percent on top of a worker's wages. That's become a source of intense concern in the country amid a national debate on France's declining competitiveness relative to Germany and Eastern European nations, as well as emerging economies like China.
In his speech, Hollande pointed to a May deal to loosen the country's restrictive labor practices in exchange for more job security as one of his few recent job market successes. That change made it easier for companies to lay off employees in some cases and to cut workers' pay and hours when times are hard, in exchange for extending more benefits to workers on short-term contracts, the NYT reported.
But unemployment has remained high with 10.9 percent in October, versus 5.2 percent in neighboring Germany, according to the Times.
Pierre Gattaz, president of the country's biggest business lobby, MEDEF, responded favorably, saying in a statement that employers were "ready to participate and actively involve themselves" in creating such a pact.
"But we have to move quickly, because there is an emergency," Gattaz said.
