French MPs pass welfare cuts, unions boycott labour forum

by Reuters
Tuesday, 8 July 2014 16:46 GMT

* Bill cuts payroll taxes for companies, angers unions

* Critics ask Hollande how cuts will affect public sector

* Valls unveils 540 mln euros for youth jobs

* Confirms tax cut for middle classes in 2015 (Adds Prime Minister statement)

By Emmanuel Jarry

PARIS, July 8 (Reuters) - France's parliament approved a series of welfare cuts on Tuesday despite abstentions by left-wing deputies, while a major teachers' union became the third group to boycott a labour forum hosted by President Francois Hollande.

With 33 Socialist deputies abstaining, parliament passed a welfare funding bill for 2014 that substantially cuts payroll taxes for companies as part of Hollande's efforts to improve their competitiveness and boost hiring.

But the vote was overshadowed by walkouts from the two-day labour forum, which highlighted anger over a policy which many on the left say amounts to a gift for companies, with no guarantee they will respect promises to create jobs.

Prime Minister Manuel Valls, who had touted the forum as a launchpad for reform, announced that the government would use 540 million euros ($737 million) - about half of which is to be drawn from European Union funds - to fight youth unemployment.

He also confirmed plans to lower income taxes for the middle class in the 2015 budget, but signalled little progress on plans to simplify the labour code.

"We need to win the battle for jobs, most of all for our youths," Valls said in a speech at the end of the forum.

The 540 million euros for youth jobs will be used to boost job centre resources for the poorly qualified, fund personal projects, improve job training and help firms hire more apprentices with the aim of reaching 500,000 by 2017, he added.

The hardline CGT and FO unions already announced on Monday they would boycott the second and final day of the two-day meeting, angered by concessions made by the government to the main employers' association Medef.

The FSU, which bills itself as France's main public sector and teachers' union, said it was following suit in protest at the way the summit was being organised and over planned cuts to public spending in the 2014 budget.

"The FSU has just slammed the door on the social conference," its General Secretary Bernadette Groison said, two hours after the start of talks on Tuesday. "(The talks) have got off to too bad a start in terms of the method of dialogue."

The meeting comes a week after Hollande's government, seeking to keep deficit-cutting promises to EU partners, pushed a new series of budget cuts through parliament.


With his approval scores stuck around 20 percent, Hollande is under pressure at home to reduce record-high unemployment while bringing the euro zone's second-largest economy up to speed with its faster-growing peers.

The French economy grew only 0.2 percent in the second quarter after stalling the first three months of the year, the country's central bank said on Tuesday, while the trade deficit widened in May.

Groison said the FSU wanted Hollande, who at the same time has promised 40 billion euros ($55 billion) of payroll and tax cuts to business, to detail how such savings would affect France's public sector.

The aim of the labour forum is two-fold: to get clarity from employers on how they plan to use the tax cuts to boost hiring, and to study proposals to remove other obstacles to job creation - for example by simplifying France's 3,200-page labour code.

Both the jobs forum and the vote over the welfare budget have crystallised left-wing resistance to the more pro-business path undertaken since the start of the year by Hollande and his new centrist prime minister, Manuel Valls. ($1 = 0.7331 Euros) (Reporting by Emmanuel Jarry and Emile Picy; Writing by Mark John and Nick Vinocur; Editing by John Irish and Tom Heneghan)

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