Deepening French jobs gloom hits recovery hopes

France's woes deepened on Thursday as news of thousands of new job losses dealt another blow to the Socialist government's hopes of reviving an ailing economy. A day after auto giant Peugeot confirmed plans to slash its workforce in response to massive losses, telecoms equipment maker Alcatel-Lucent said it would cut 5,000 jobs worldwide by the end of 2013. Air France presented proposals that would eliminate 5,122 positions while pharmaceuticals group Sanofi acknowledged that a planned reorganisation would lead to unspecified job losses, estimated at up to 2,000 by unions. Elected in May on a jobs and growth ticket, President Francois Hollande is struggling to deliver amid the eurozone's financial crisis, which limits his administration's ability to stimulate activity through public spending. Unemployment in France is running at nearly 10 percent of the workforce. Just under three million people were looking for work in June and a further 1.4 million were working fewer hours than they would like, according to official figures. With the jobless total set to rise further, it is not clear what can be done to turn the economy around.The OFCE, an influential economic forecasting body, on Thursday published a study of 11 job-creation initiatives contained in Hollande's manifesto. The study concluded that the plan's net job creation will be largely offset by the 160,000 jobs set to be destroyed by austerity measures designed to bring France's budget deficit down to three percent of GDP by next year and eliminate it altogether by 2017. Hollande has branded Peugeot's plan to cut 8,000 jobs as "unacceptable". But analysts say the auto giant has little option but to proceed with cost cuts after posting a first-half loss of 819 million euros ($999 million). In its first concrete attempt to intervene in the economy, the government has promised 490 million euros in subsidies to promote purchases of electric and hybrid cars in the hope of boosting the auto sector. The scheme has come under fire from both sides of the political spectrum. Parties to the left of Hollande's Socialists, whose fortunes have been revived by the economic crisis, denounced the plan as derisory when set against the scale of what Communist daily L'Humanite described as a "social emergency". The main right-wing opposition accused the administration of failing to address what it sees as the real problems: French industry's declining competitiveness and a lack of flexibility in labour markets. The cocktail of a deteriorating economy and heightened political divisions has led some to predict an explosion of social unrest. "It's going to be a hot autumn," said Pascal Riviere, a worker at Peugeot's closure-threatened Aulnay plant near Paris. "I think you will see a very strong and widely followed mobilisation against these job cuts." Against this backdrop, the Socialists have been anxious to be seen to be doing everything they can to stem the tide of job losses. Arnaud Montebourg, the specially designated industrial renewal minister, this week asked the European Union to review free trade deals with South Korea over what France considers to be unfair competition from the Asian country's carmakers. "Europe can be open but it can't be given away for nothing," Montebourg said.