Xinhua, Paris :
Losing his bet on jobs, French President Francois Hollande was still banking on a turnaround in French labor market this year with a new promise to make labor costs cheaper to encourage recruitments.
In an effort to defend his economic credentials, the head of state pledged to ease companies’ tax burden by 30 billion euros (41 billion U.S. dollars) by 2017, eyeing creating 1.8 million posts next five years.
But will the “liberal shift” in the Socialists’ policy help France’s 2.6 trillion-U.S. dollar economy to show some muscles and ease the strain on jobless claims?
Hoping to stimulate the local job market with thousands of state-sponsored job contracts and training, Hollande’s pledge to reverse the jobless trend was broken as the number of jobseekers hit 3.303 million at the end of December 2013, up by 5.7 percent on yearly basis.
“We stabilized unemployment in 2013, it has not yet fallen and that’s why I presented the pact of responsibility to the French. We will start decreasing the unemployment if we will all be mobilized, ” Hollande said during a visit to Turkey.
Expecting a 11.2-percent rise in joblessness in Europe’s main powerhouse this year, Paris based-Organization for Economic Cooperation and Development (OECD) hailed “the willingness to reduce employers’ social contributions, which are the highest in the OECD area as a percentage of GDP (gross domestic product), through an essential reduction in government spending.”
“This would make it possible to boost employment, restore business margins, finance investment and ultimately improve competitiveness…” OECD Secretary-General Angel Gurria said.
“The planned reduction in social contributions must go beyond the abolition of contributions to family-related benefits alone,” he said.
Eric Heyer, economist at the economic think-tank OFCE, said Hollande’s proposal to alleviate companies’ charges would stimulate investment and bolster jobs creation.
“When we lower expenses we decrease labor costs and therefore we lower the cost of production. So companies can produce cheaper than before to gain market share outside and create jobs,” he said.
However, he said he didn’t expect a quick turnaround in the labor market. “We’ll wait till 2016 to see the first results of Hollande’s pact.”
France should accelerate its GDP by at least 1 percent to incite the morose private sector to hire more, above a government forecast of 0.9 percent this year, according to analysts.
