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Strikes heap more woe on French government

On almost all assessments, the battle to reduce France's high unemployment will not be helped by the wave of strikes causing severe disruption to transport and public services, or their cause.

PARIS // On almost all assessments, the battle to reduce France's high unemployment will not be helped by the wave of strikes causing severe disruption to transport and public services, or their cause.

France already faces a bill for between €200 million (Dh1.02 billion) and €400m a day as a direct cost of the outburst of protests against the government's plans to raise the retirement age to 62 from 60, says the finance minister Christine Lagarde.

Observers fear such industrial action - although now waning - will bring more redundancies and harm recruitment prospects.

But it is also believed the pension reform will play a part in driving up jobless figures, especially among the young but also workers nearing retirement.

Philip Askenazy, the research director at the National Centre for Scientific Research, has estimated that young people, above all in the public sector, tended to obtain posts vacated by older employees.

Raising the retirement age by two years will reduce recruitment by an estimated 30,000 posts a year for 10 years, Mr Askenazy says, after which the impact of the reforms will diminish as the "rhythm" of employment and departures is re-established.

But for older people, he feels, the present culture of encouraging employees to leave before reaching retirement age will intensify, notably in the private sector, without corresponding recruitment of young replacements. The prospects for employment in France are not bright.

Employers have long complained that rigid bureaucracy and the difficulty of shedding workers on grounds of economic necessity or even incompetence is a significant deterrent to hiring.

Cheaper labour has brought call centres to north Africa and manufacturing to eastern Europe.

France's austerity measures are slowing recovery, says the French Observatory of Economic Conditions (OFCE), with growth fractionally better than officially forecast this year (1.7 per cent instead of 1.5 per cent) but lower next year (1.6 per cent against the government's projected 2 per cent). The OFCE says even that growth will be "less job-rich", pushing up unemployment from 9.4 per cent this year to 9.7 per cent next year.

The government is more optimistic, suggesting the unemployment rate will fall below 9 per cent next year.

Jacques Reland, the head of European research at the Global Policy Institute, accepts the continuing strikes - which he blames on government mishandling of pension reform - could inflict further damage.

But by far the most important factor, Mr Reland says, is the likelihood of "very sluggish" growth in France and neighbouring countries.

"Unemployment is, and will remain, one of the biggest problems in the French economy," he says.

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