"Ambitious action" necessary to improve French labor market, promote growth: OECD

The Organisation for Economic and Cooperation Development (OECD) on Thursday called on French authorities to further reform the domestic labor market in a bid to offer jobs and help create more wealth.

In its economic survey of the euro zone's second largest economy, the Paris-based international think tank noted "a series of important pro-growth structural policy measures," but recommended "more ambitious action to reform the labor market, curb high levels of public spending and taxation and create jobs."

Working hard to reverse a long running rise in unemployment claims, French President Francois Hollande pumped millions of euros to encourage companies to hire young and poorly-qualified unemployed people. He also proposed a 30 billion euros (32.67 billion U.S. dollars) cut in labor costs to promote investments and encourage recruitment.

"France has considerable economic assets, which have helped it maintain a high standard of living while keeping income inequality at low levels," said OECD Secretary-General Angel Gurria.

"The economic recovery is underway, but unemployment is at high levels, and public finances remain weak, with chronic deficits and rising public debt. Achieving stronger, more inclusive, sustainable growth will require additional reforms that substantially improve the outlook for growth and job creation," he added.

According to the OECD, the French economy is projected to grow by 1.1 percent this year and 1.7 percent in 2016. However, "the outlook is fragile and insufficient to bring down unemployment significantly."

In order to have robust and sustainable growth, the government needs to lower public spending by squeezing expenditure of local authorities and holding down social spending on the health care, pension and unemployment insurance systems, OECD said.

It added that public spending in France accounted for 57 percent of GDP, the highest level in the OECD.

"Better governance and targeting of social and educational policies towards the most vulnerable, in particular to address the high levels of educational performance inequality linked to social economic background, would enable France to fulfill its ambitious economic and social objectives," the OECD said in its report.

The OECD set France's unemployment rate at 10.1 percent for 2015 against 9.9 percent in 2014. Endit