PARIS: French President Jacques Chirac yesterday scrapped a youth job law that provoked weeks of angry protests, in a climbdown opponents celebrated as an unqualified victory.
The move was a personal blow to Prime Minister Dominique de Villepin, who had championed the First Job Contract (CPE) and seen his popularity slump with the mass opposition and unrest.
Villepin said in a television address he regretted that weeks of strikes and protests showed the CPE could not be applied but gave no hints about his own political future, on the line over his handling of the dispute.
"The necessary conditions of confidence and calm are not there, either among young people, or companies, to allow the application of the First Job Contract," Villepin said, adding he would open talks with unions on youth employment.
Students had planned fresh marches for today and it was unclear if they would call off their strikes and a blockade of many universities and high schools after the announcement.
Villepin said the CPE contract would reduce youth unemployment but saw his poll ratings plunge as opposition to the measure mounted, damaging his chances of becoming the ruling UMP party's candidate for president in elections in 2007.
"The president of the republic has decided to replace article 8 of the equal opportunities law with measures to help disadvantaged young people find work," a statement from the presidency said.
The new measures include increased financial incentives to employers to hire people under 26 who face the most difficulties in getting access to the labour market, Employment Minister Jean-Louis Borloo said in an interview with Le Monde newspaper.
That would apply to approximately 159,000 young people currently hired under government-subsidised job contracts and the cost to the government would be around 150 million euros (US$180 million) in the second half of 2006, Borloo said.
Those measures could be introduced in parliament this week, a senior UMP deputy said.
France's youth unemployment stands at 22 per cent. Lack of jobs is the country's number one political issue and a major reason for weeks of rioting in poor suburbs late last year.
The climbdown over the CPE makes it unlikely the government will attempt broader reform of France's highly-regulated labour market before the elections, one economist said.
"The question is whether this has signed away the possibility of reform in the longer term," said David Naude, economist at Deutsche Bank.
Chirac and Villepin were careful to say that the CPE, part of a wider law on equal opportunities, was being "replaced," but others pronounced it dead.
Source: China Daily