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France

Sarkozy calls unions, labour leaders for crisis talks

Text by News Wires

Latest update : 2012-01-19

French President Nicolas Sarkozy convened an urgent "social summit" between labour unions and business leaders Wednesday in the wake of a Standard and Poor's downgrade and persistent concerns about slow economic growth and unemployment.

AFP - President Nicolas Sarkozy staged a pre-election crisis jobs summit Wednesday to try to boost the recession-bound French economy as well as his own chances of getting re-elected.

The "social summit" came just five days after Standard and Poor's downgraded France's credit rating and dealt a severe blow to the right-winger's hopes of hanging on to his job after the presidential vote three months from now.

The leaders of the five main unions and three employers' groups sat down around a table in the president's Elysee palace along with Sarkozy, his prime minister and six ministers.

"The gravity of the crisis obliges us to make decisions," Sarkozy told them, according to a text provided by his office.

After the morning summit, he announced 430 million euros ($550 million) worth of new measures to encourage struggling firms to keep workers on and to retrain them.

All necessary measures must be taken to "keep workers in their activity (and) to train workers within the company rather than making them redundant" to join the nearly three million people currently out of work, he said.

Sarkozy said he would wait till the end of the month to announce details of his plans for a "social tax" -- to offset planned cuts in payroll charges -- and for making working hours more flexible.

Union leaders gave a lukewarm reaction to the summit, with CFDT leader saying there were a "few useful measures" but that the government was "vague" on how they would be financed.

CGT leader Bernard Thibault dismissed the measures as having "no real impact on the employment situation today," with 9.8 percent of the workforce out of a job, a 12-year high.

Thibault said he thoroughly disagreed with Sarkozy and employers' argument that the real cause of unemployment was the high cost of labour in France.

Sarkozy was pinning his hopes on Wednesday's summit to reverse the poll ratings that put him in second place behind his Socialist challenger Francois Hollande and just ahead of far-right National Front leader Marine Le Pen.

But unions oppose his "social tax" plan, which would cut payroll charges on employers and workers and recoup the revenue mainly by raising the sales tax.

They are against measures that would hit consumers' pockets at a time when the economic outlook is grim and the country expected to fall into recession.

The problem for the president is that he wants to push through potentially costly reforms while France is in a budget-tightening cycle.

Union scepticism is shared by many French, with nearly three out of four people saying they believe the much-publicised summit will result in little or no change, according to a poll in the communist daily L'Humanite.

Sarkozy reportedly told allies last month: "If we lose the triple-A (credit rating), I'm dead."

He had staked his re-election bid on convincing voters that he was the only candidate with the stature and experience to save France from economic meltdown.

Sarkozy justified pushing through two austerity packages as necessary to defend France's triple-A rating.

Friday's downgrades had been mostly expected, but analysts said the move showed the eurozone debt crisis was worsening.

The downgrade means France may now have to pay more to borrow on international money markets, which could raise the cost of borrowing for businesses and households and dampen already faltering economic growth.
 

Date created : 2012-01-18

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