French government courts controversy with labour market reform

France's Socialist government unveiled labour market reform plans making it easier for companies to cut staff, provoking criticism Thursday from within its own ranks and labour unions.

Despite unemployment running at record levels, the measures to be considered by the government next month would dismantle one of the key job guarantees for French workers.

The goal of the reform is to "improve the competitiveness of companies, to develop and and preserve employment," said Labour Minister Myriam El Khomri in an interview to the business daily Les Echos.

She called the reform "French-style flexicurity" in a reference to the Danish system which gave companies flexibility to cut jobs but installed social security measures to protect unemployed workers.

Currently French companies have to justify in court plans to shed workers due to an economic downturn, a process they have complained makes it difficult and expensive to trim their staff when the economy slows and ultimately makes them reluctant to hire.

The reform spells out simple conditions such as falling orders or sales, or operating losses as sufficient cause for shedding staff.

Sylvain Niel, a labour lawyer who defends companies, said the proposed reform will "provide companies with complete flexibility over their staff in the short term".

The proposal could drive a wedge in the ruling Socialists.

"I'd have a tough time voting for it in its current version" said the head of the Socialist Party, Jean-Christophe Cambadelis.

"At the moment, the draft text isn't balanced between flexibility and security."

With many left-wing Socialists unhappy with the government's adoption of pro-business policies, El Khomri threatened that the government could use a controversial mechanism allowed under the French constitution to adopt the law without parliamentary approval.

Labour unions were also critical of the reform plan.

"We can't accept it as it stands," said Jean-Claude Mailly, head of the Labour Force union.

The Solidaires union said Hollande's decision to favour competitiveness as did his conservative predecessor Nicolas Sarkozy "...will produce the same results: no jobs and everything to expand company profit margins."

The draft reform also provide more room for companies to reach agreements with their staff on employment conditions, and provide more exceptions to the conditions set out in the labour code, including on overtime pay and maximum working hours.

The reform also limits the damages employees can win in court for wrongful firing.