World Economy

France to Fight Joblessness by Boosting Temporary Contracts

France to Fight Joblessness by Boosting Temporary ContractsFrance to Fight Joblessness by Boosting Temporary Contracts

French Prime Minister Manuel Valls on Tuesday unveiled a battery of measures to encourage small businesses to take on more staff in a bid to chip away at the country’s dismal unemployment figures.

Softened labor laws and a bonus for hiring their first employee are meant to encourage small and medium-sized enterprises by “lifting obstacles, uncertainties, simplifying life,” Valls announced after a cabinet meeting, AFP reported.

Jobless lines have grown longer under President Francois Hollande, who has pledged not to seek a second term in office in 2017 if he fails to reverse the upward trend in unemployment which stands at 10 percent.

The “Small Business Act” will grant a bonus of 4,000 euros ($4,500) to businesses who currently have no employees (there are 1.2 million in France) and who hire their first worker for a year-long contract.

France’s stiff labor laws often dissuade employers from taking on staff as they fear they won’t be able to fire them. To ease these concerns the government is seeking to put a limit to the damages that can be awarded to a staff member found to have been fired unfairly.

Valls said this measure did not apply to large companies or “serious labor law abuses” like discrimination or harassment. Short-term contracts – which have very strict rules for employers to encourage them to take staff on permanently – can now be renewed twice instead of only once. However the maximum time someone can be employed as a temporary staff member remains 18 months.

The government also suspended a number of the additional obligations that small businesses face when they add employees. For Christian Person, CEO of French consultancy firm Umalis, these measures “couldn’t come soon enough. It is the essential flexibility that our small businesses require to adapt to an increasingly competitive global economic environment.”

He said government had “procrastinated” for too long, but welcomed the move which would “allow us to overcome the fear of hiring.”

 Longer Work Week

The governor of the Bank of France said Monday that a lengthening  of the work week and other changes are needed to restore the competitiveness of European economies.

Christian Noyer told reporters at the Montreal Economic Conference that the relatively early retirement age and short work week for most workers are putting a strain on governments and weakening the competitiveness of businesses.

“It means that jobs are moving outside the country and the fiscal imbalance of the pension systems is impossible to attain with the increased duration of life if you retire too early,” Noyer said.

Different European countries are trying to tackle the challenges, including France which has already engaged in three pension reforms.

“All the countries have also started more or less decisively to reform their pension systems and we know that we need more flexibility in the working hours,” Noyer said.

In remarks prepared for the event, Noyer said economic growth has improved too little to significantly reduce high unemployment, especially among youth.