President Francois Hollande rode to power in a presidential runoff last month on a promise to tackle soaring unemployment, which has reached the highest level in nearly 13 years. With the economy stalling, Labour Minister Michel Sapin said urgent measures were needed against unemployment and that he aimed to put forward legislation after the summer break.
"The main idea is to make layoffs so expensive for companies that it's not worth it," Sapin said in an interview with France Info radio. "It's not a question of sanctions, but workers have to have compensation at the right level," he said.
The push to make firing more difficult in France, where making layoffs is already tightly regulated and often costly for employers, contrasts with moves under way in other euro zone countries such as Italy and Spain to make job cuts easier. Sapin, a former finance minister and long-time friend of Hollande, said the government could not stand by idly as some companies cut workers just to improve profitability and boost their dividends to shareholders.
Industry Minister Arnaud Montebourg is also planning legislation that would force companies to sell plants they want to get rid off at market prices to avoid closures and job losses. The government and unions are bracing for a wave of layoffs after a June 10 and 17 legislative election, fearing companies have put off job cuts until after the election period.
Data from the INSEE statistics institute showed on Thursday that France's jobless rate hit the psychologically important threshold of 10 percent in the first quarter of the year. Unemployment in France has now risen even higher than in the wake of the 2008-2009 financial crisis, rising from 9.8 percent in the fourth quarter of 2011 to the highest level since the third quarter of 1999.
The rate for mainland France rose to 9.6 percent from 9.3 percent in the final three months of 2011 also to hit its highest level since the third quarter of 1999.