PARIS, April 10 — President Jacques Chirac crumbled under pressure from students, unions, business executives and even some of his own party leaders on Monday, announcing that he would rescind a disputed youth labor law intended to make hiring more flexible.
The retreat was a humiliating political defeat for both Mr. Chirac and his political protégé, Prime Minister Dominique de Villepin, underscoring the paralysis of their center-right government 13 months before presidential elections.
It also laid bare the deep popular resistance to liberalizing France's rigid labor market, and makes any new economic reform politically impossible before a new government is in place, and perhaps not even then.
"Dead and buried," is how Jean-Claude Mailly, leader of the leftist union Force Ouvrière, described the fate of the labor law. "The goal has been achieved."
The cancellation of the law, which Mr. Chirac signed April 2, is aimed in large part at bringing an end to two months of major protests and strikes throughout France that have shut down universities, threatened to hurt tourism and the economy, and brought violent clashes between young people and the police.
Still, a student protest march scheduled for Tuesday will proceed as planned, and students at several French universities voted Monday to continue blocking access to classes, demanding more concessions from the government in work practices and job security.
"Today
is a defining victory, but there are still many issues
outstanding," said Bruno Julliard, who heads UNEF, the main student
union.
The new law was intended to give employers a simpler way of hiring workers under 26 on a trial basis without immediately exposing companies to the cumbersome and costly benefits that make hiring and firing such a daunting enterprise. Opposition to the law reflects the deep-rooted fear among the French of losing their labor and social protection in a globalized world.
In a television interview on Monday evening on the private channel TF1, Prime Minister de Villepin, who had been widely hailed as a possible center-right candidate in the May 2007 presidential elections, said he hoped to learn lessons from what he called "an extremely difficult time," contending that he had never harbored presidential aspirations.
"I have always indicated that I did not have presidential ambitions," said Mr. de Villepin, who had drafted and pushed the law.
His sober, subdued demeanor contrasted sharply with his defiant and angry stance in defense of the law in recent speeches before Parliament, in which he proclaimed that the future of the youth of France was at stake and vowed not to back down.
Both in his television interview and in a brief televised address earlier in the day, Mr. de Villepin blamed the French people's fears and anxiety for the defeat of the measure.
"The necessary conditions of confidence and calm are not there, either among young people, or companies," he said in the television address.
The abolition of the law was announced without fanfare, in a terse, one-sentence communiqué from Élysée Palace: "Under the proposal of the prime minister and after having heard the presidents of the parliamentary groups and the officials of the parliamentary majority, the president of the Republic has decided to replace Article 8 of the law on equality of opportunities by a mechanism in favor of the professional integration of young people in difficulty."
To replace the defunct youth labor law, senior lawmakers from Mr. Chirac's party presented a much weaker draft law to Parliament on Monday.
The new proposal would give employers financial incentives to encourage the hiring and training of young workers, and give job seekers more guidance and increase internships in areas where jobs are relatively plentiful, including restaurants, hotels and nursing.
There will be temporary subsidies or tax breaks for companies hiring unskilled young workers permanently. The cost of these measures, about $363 million a year, would be financed through an increase in tobacco taxes.
In its initial form, the law allowed employers to fire new employees within two years without cause. In the face of mounting pressure, Mr. Chirac watered it down so that employers could subject new employees to only a yearlong trial period, and then would have to offer a reason for any dismissal.
Students and unions, bolstered by support from the opposition Socialists and even some business leaders, had vowed to continue their street protests until the law was rescinded.
The Socialists were quick to proclaim victory on Monday. "This is an unquestionable retreat," François Hollande, the leader of the Socialist Party, told reporters. "It is a grand success for the young and an impressive victory for the unity of the unions."
Mr. Hollande, who has not ruled out running for president, said the crisis offered the party "reasons to hope."
But it is much too early to predict how the government's defeat over the jobs law will affect the presidential race.
Certainly, Mr. de Villepin is severely weakened. But as a former foreign minister who never held elected political office, he always lacked the obvious credentials to secure the nomination easily.
By contrast, Interior Minister Nicolas Sarkozy, who successfully avoided having to use substantial force to calm the protests, has emerged stronger. And as the leader of the governing center-right Union for a Popular Movement Party, he has the power of the party machinery behind him.
In a poll published Sunday in the newspaper Le Parisien, 85 percent of the respondents said they saw both Mr. de Villepin and Mr. Chirac as weakened by the battle over the law, but 53 percent said it had improved Mr. Sarkozy's standing.
In an interview that is to appear Tuesday in the center-right daily Le Figaro, Mr. Sarkozy emphasized that this was not a moment for criticism of the government. "Politics is a long-term affair," he said. "No one gains from humiliation."
He went out of his way to declare his fidelity to Mr. Chirac, his longtime political rival, saying, "Never, in a long time, have I been as in sync with the president of the republic as in these last few weeks."
Instead, Mr. Sarkozy unleashed his criticism against the Socialist opposition, saying: "The left has nothing to propose, nothing to say, nothing to defend. It can only feed off the right's mistakes."
The Socialists have offered no plan of their own to modernize the labor market. Nor is there a Socialist plan to reduce youth unemployment, which is 22 percent nationally, and more than double that in some of the poor suburbs racked by rioting last fall.
Perhaps the most surprising setback for the government came when some business leaders, who were supposed to find it easier to hire young workers with the new law, began to criticize the government's handling of the dispute and warned that a prolonged crisis could damage France economically.
In a statement on Monday, Medef, France's largest business federation, expressed hope that the withdrawal of the law "marks the end of a crisis that dented the credibility of our country."
The remarks of former President Valéry Giscard d'Estaing were just as cutting. In an opinion piece in the weekly Journal du Dimanche, he accused Mr. Chirac of a lack of leadership.
"It's high time to get out of this quagmire," Mr. Giscard d'Estaing
said. "The enemies of France have viewed these images with delight, and
her friends with consternation."
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France Struggles to Reform Despite Pride in Revolution
Filed at 5:39 a.m. ET
PARIS (Reuters) - The ideals of the French Revolution struck a chord that has echoed for more than 200 years but when it comes to reform France is struggling to find the right key.
The motto of Liberty, Equality and
Fraternity was revolutionary at the time, yet radical change is what
many of
those who still cherish it today fear the most.
They demonize anything that smacks of ``Reaganomics'' or the pro-market policies Margaret Thatcher pushed through in Britain, saying it will weaken cherished social protections and open the floodgates to unbridled market forces.
The left, as well as some conservatives, say reforms will bring inequality and individualism at the expense of fraternity -- and be a sure vote loser.
``I have the impression that we have to follow this free- market path like in Britain and I'm not too keen on it,'' said Pierre Malige, a teacher who joined protests in Paris last week.
Marches and strikes forced the government to scrap a reform that, though modest, was the most significant attempt in years to liberalize the labor market and create sorely needed jobs.
``The Fifth Republic has had its day. Everything needs to change. We are going to have a non-violent revolution,'' said Barthelemy Billette, a student protesting outside the prestigious Sorbonne university.
But he opposed the First Job Contract (CPE), a bid to make it easier to hire and fire young people who suffer most from unemployment.
That paradox -- dissatisfaction with the status quo but resistance to change -- is the core of the problem confronting President Jacques Chirac and Prime Minister Dominique de Villepin, analysts said.
DEFICITS AND JOBLESSNESS
The European Central Bank is constantly urging euro zone states to carry out structural economic reforms, including freeing up labor markets and boosting competition, to help long-term growth and provide the jobs polls show voters want.
In France, the need for new jobs is urgent. Late last year youths from poor suburbs torched thousands of cars in weeks of riots to protest exclusion from mainstream French society.
A core grievance was unemployment -- 22 percent among young people and double that in some urban neighborhoods.
Deficits run up by France's welfare system forced Chirac's government in 2002 to make a priority of reform of labor law and the health, pensions and social security system.
The tension between the need for change and fear of it also helps explain the appeal of the far-right National Front and the resentment that helped sink a referendum last year on the European Union constitution.
``Here's the cold shower: apparently no one knows how to move forward. Here lies the bitter realization of the impossibility of reforming France,'' said Andre Grjebine, international research director at Paris's Science Po university.
Dialogue was the solution but the process was impeded by a left-right ideological divide that made compromise difficult, and by a weak trade union movement which encouraged government to ignore them as a reform partner, he said.
POLITICAL WILL?
Commentators said the fact that Villepin rushed the CPE through parliament with little debate or dialogue with unions or students was at the root of their passionate opposition to it.
The defeat of the CPE would in itself make it less likely that politicians would attempt significant reform, said an editorial in the business daily La Tribune.
Victorious unions and students could use their new-found power to block progress and defend the status quo.
``Or ... they could learn the lesson ... that there's nothing better than the virtues of dialogue to modernize the relations between workers and businesses,'' the editorial said.
One problem was the length of time politicians stayed within France's system, sapping their energy and allowing them to be absorbed into a system they then have a stake in maintaining.
A charge leveled at Chirac is his political longevity. He became economy minister in the late 1960s and has remained in politics ever since.
But at root was the question of the desire for reform, said Robert Schneider, political editor of Le Nouvel Observateur.
``Chirac doesn't have that steadfastness. In a country which is already difficult to reform and where the welfare system is so important to so many French people, reform becomes impossible if you haven't got the political will,'' he said.
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Chirac's Rigid Creed for French Nonreform
PARIS
Jacques Chirac is discredited, Dominique de Villepin, too, and with them, it seems, a certain France that told the world it could avoid change and, as exceptionalist as ever, escape immobility's ridiculousness in the process.
Absurdity certainly has caught up with this routine. There's never been a more incongruous political crisis than the country's present misery about relaxing employment regulations for young people: scores of thousands of them - a poll shows 76 percent of the 15- to 24 year-old age group aspire to the privileges, early retirement and ironclad security of civil service jobs - demonstrating for social conservatism on the historical turf of new dawns and revolution.Which leaves the left, riding weeks of protests and the Chirac/Villepin retreat, in a much-improved position to win the presidency. But the left's return to executive power after 12 years' absence would be without the deep reforms in society that Margaret Thatcher left behind for Tony Blair (and which make Britain a country that works.)
Since Chirac fled tackling reform head on, and has been humiliated as a result of his prime minister trying to grab only the big toe of change, the Socialists can't be objectively encouraged or expected to act as its agents. Rather the opposite. The one hot Socialist presidential prospect, Ségolène Royal, attacks the word flexibility, a euphemism for reform in a country certified as scared stiff of it. She argues flexibility "means social destructiveness and makes no economic sense." Royal's prescription for a France she admits is in decline? She says: "I think that to re-establish confidence, citizens have got to see that the experiences they're living through are being identified with. The best way to achieve that is to ask them what they think. I believe in citizen expertise."
If that very probably means that fighting for reform gets eliminated as the best way to win the presidency, it proves Chirac's sorry axiom right. In all of France's ongoing grief, Jacques Marseille, a professor of the history of economics at the Sorbonne, has become, left and right, the media's go-to guy for wisdom on the demonstrations and the country's rejection of change. Talking to the newspaper Le Monde, he suggested that what France has now become is a pole of emptiness, "the model of the absence of real democracy, or incapacity for discussion, reform and compromise." So was France impossible to reform? he was asked. "Yes," Marseille answered. "Or in any case it's exceptionally difficult."