(Reuters) – France’s main employers group reaffirmed on Tuesday that companies would not agree to hiring targets as sought by President Francois Hollande, hours before talks on a so-called “responsibility pact” to revive the economy were due to start.
Hollande last week set out the pact’s details, under which he would offer 30-35 billion euros ($40-47 billion) of cuts in labor charges and a simplification of regulations in return for more hiring to cut unemployment stuck at around 11 percent.
Medef President Pierre Gattaz said France’s private sector could create one million extra jobs if given such relief, but insisted that committing individual companies to specific targets was unworkable.
“I am not talking about written commitments,” he told France 2 television.
“One million jobs, that is the consequence of the package of measures we expect – and which we expect in 2014, moreover. Companies are being asphyxiated and terrorized by a political mood that was difficult for them in 2013,” he said.
So far, Hollande has said only that firms would be completely exonerated from contributions to family benefit funds by 2017, but has yet to set out a clear timing. Talks with employers start on Tuesday and are due to come up with a clearer roadmap in coming weeks.
Moreover Hollande has suggested that the cost of the measures to the government could be partly offset by replacing 20 billion euros of tax credits already promised to companies from this year – in other words, the net new impact of the moves could be as little as 10-15 billion euros.
France has some of the highest state spending and taxes in the world, with public spending currently around 56 percent of national output – some 12 points higher than that in Germany – and a total tax burden at over 40 percent of output.
Hollande has said he is ready to find an extra 50 billion euros worth of cumulative spending cuts over the three years from 2015 to 2017, a move that would slow down the projected rise in spending. He is looking at cuts in France’s complex system of local government and its vast welfare system.
However Gattaz proposed that Hollande go further and completely freeze spending until the end of his mandate in 2017 at a current level of around 1.2 trillion euros. ($1 = 0.7373 euros)
(Reporting by Mark John; editing by Leila Abboud)
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