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French Leader Would Reward Companies That Hire More People French Leader Would Reward Companies That Hire More People
(about 3 hours later)
PARIS — President François Hollande, seeking to reduce France’s punishingly high unemployment rate, has called for a “responsibility pact” with businesses that would reward companies that hire more people with lower taxes and greater flexibility.PARIS — President François Hollande, seeking to reduce France’s punishingly high unemployment rate, has called for a “responsibility pact” with businesses that would reward companies that hire more people with lower taxes and greater flexibility.
“There is but one objective, one priority, one engagement, and that’s employment,” Mr. Hollande said in his New Year’s Eve address to the nation.“There is but one objective, one priority, one engagement, and that’s employment,” Mr. Hollande said in his New Year’s Eve address to the nation.
The idea of the pact “is founded on a simple principle,” he 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. The idea of the pact, he said, “is founded on a simple principle: lower employment costs and fewer constraints on business activities.” In return, Mr. Hollande added, businesses must step up with more hiring and greater willingness to work with employees to reduce layoffs.
Mr. Hollande did not offer any details of his proposal. He did not offer any details of his proposal.
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 has become a source of intense concern here amid a national debate on the country’s declining competitiveness relative to Germany and East European nations, as well as emerging economies like China. 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 has become a source of intense concern here in the face of a national debate on the country’s declining competitiveness relative to Germany and East European nations, as well as emerging economies like China.
In his speech, Mr. 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. In his speech, Mr. Hollande pointed to a deal last May 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.
But unemployment has remained high — 10.9 percent in October, versus just 5.2 percent in neighboring Germany — and it dominates the political discourse. But unemployment has remained high — 10.9 percent in October, versus 5.2 percent in neighboring Germany — and it dominates the political discourse.
Recent history has included examples of similar government initiatives that failed to accomplish their goals, including a tax break to restaurant owners, who simply pocketed the extra cash rather than hire new workers.Recent history has included examples of similar government initiatives that failed to accomplish their goals, including a tax break to restaurant owners, who simply pocketed the extra cash rather than hire new workers.
But 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 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,” Mr. Gattaz said.“But we have to move quickly because there is an emergency,” Mr. Gattaz said.
Despite his personal reservations over Europe’s tight-budget orthodoxy, Mr. Hollande, a Socialist, has largely toed the line from Brussels on the need to balance government budgets to help end the sovereign debt crisis that has destabilized the euro zone. In practice, that means he has followed his predecessor, Nicolas Sarkozy, in raising taxes and freezing spending even with the economy stagnant and about three million people out of work. Despite his personal reservations over Europe’s tight-budget orthodoxy, Mr. Hollande, a Socialist, has largely toed the line from Brussels on the need to balance government budgets to help end the sovereign debt crisis that has destabilized the euro zone.
In practice, that means he has followed his predecessor, Nicolas Sarkozy, in raising taxes and freezing spending even with the economy stagnant and about three million people out of work.
Taxpayers’ weariness with ever-increasing demands has helped to push Mr. Hollande’s poll numbers to record lows — and taxes for businesses and households rose again on New Year’s Day.Taxpayers’ weariness with ever-increasing demands has helped to push Mr. Hollande’s poll numbers to record lows — and taxes for businesses and households rose again on New Year’s Day.
Prime Minister Jean-Marc Ayrault responded to nationwide tax protests in November by saying he would lead an overhaul of the system, which he said “has become very complex, almost unreadable.”Prime Minister Jean-Marc Ayrault responded to nationwide tax protests in November by saying he would lead an overhaul of the system, which he said “has become very complex, almost unreadable.”
Mr. Hollande addressed criticism of the tax burden and France’s state expenditures, which at nearly 57 percent of gross domestic product are the highest in the 18-nation euro zone. He said that he intended to reduce public spending and that his government would “save money everywhere it is possible,” including by reducing “the excesses and abuses” in social welfare spending. Mr. Hollande addressed criticism of the tax burden and France’s state expenditures, which, at nearly 57 percent of gross domestic product, are the highest in the 18-nation euro zone. He said that he intended to reduce public spending and that his government would “save money everywhere it is possible,” including by reducing “the excesses and abuses” in social welfare spending.
“We have to spend less to reduce our deficit,” Mr. Hollande said, “but also to eventually be able to reduce taxes.”“We have to spend less to reduce our deficit,” Mr. Hollande said, “but also to eventually be able to reduce taxes.”