Interview: France's labor code reform useful but uncertainties remain: OECD economist

Reform of France's strictly codified labor code could help the government to inject dynamism into the anaemic domestic job market. But, many uncertainties overshadowed the proposed measures, an OECD economist said Wednesday.

In a move to honor commitment to bring down jobless claims, President Francois Hollande unveiled a fresh devise aimed at making layoffs easier, reducing overtime pay and economic redundancies, and opening to negotiation working hours and rest time holiday.

In a revised version of labor reform, the government said additional compensation pay for dismissed workers will be indicative and no long binding guideline.

Adding to that, it pledged more financial aid to poor young people and reinforced training of unskilled people without work.

"Parts of the draft law go in the right direction. Clarifying the conditions for economic dismissals is useful and might ease access to open-ended contracts as well as workers' mobility, reducing skills mismatches," Antoine Goujard, an economist at the Organization for Economic Co-operation and Development (OECD), told Xinhua.

Strengthening firm-level agreements could also help to better align wages and productivity, according to the OECD expert.

"However, there is little evidence that lowering employment protection by itself can significantly reduce the aggregate unemployment rate," he added.

According to the economist, the French government had to take further moves to allow more wage flexibility at the firm level, noting the necessity of "broader measures ... (to) help lower the unemployment rate."

MODEST DECLINE IN UNEMPLOYMENT IN NEAR TERM

Due to fragile economic recovery in the eurozone's second biggest power, the OECD expert expected a modest decline in the unemployment rate in the medium term.

At the end of February, France numbered 3.591 million people without work, hitting 3-year-high, labor ministry data showed.

In a bid to devote on a campaign promise to create more jobs, Hollande proposed a "major reform" that would help simplify the labor code, reinforce collective negotiation and to establish a private business account that would give new rights to workers throughout their professional life.

In a further effort to start lowering unemployment trend, the head of state offered companies low taxes to encourage investment and incite them to recruit more.

"We estimated in September 2015 that the main measures taken by the government since 2012 could raise the level of GDP by 3.9 percent over a 10 year horizon. This will have a positive impact on the French labor market," Goujard said.

The economist said the government had already taken "significant steps in the right direction" to bring down joblessness rate.

However, he recommended to improve the population's skills mainly by reducing inequality in educational outcomes and strengthening lifelong training, to reduce the tax burden and public spending, and strengthening competitive pressures throughout the economy.

The OECD sees unemployment rate in France metropolitan at 9.7 percent by the end of 2017 compared to 10 percent in 2015. Endit