Chirac says top priority is jobs

PARIS -- President Jacques Chirac made employment a top priority for 2004, promising during his New Year's Eve speech a new law to boost job creation.

Chirac spoke after the French national statistics agency announced a slight decrease in the jobless rate, from 9.7 percent in October to 9.6 percent in November. The news suggested that France's recovery remains on track after a third-quarter pickup.

Chirac thanked the French for helping bring growth in 2003. Gross domestic product in 2003 was expected to reach a modest 0.2 percent expansion.

"What is at stake in 2004 is to make the most of this growth, with one priority: employment," Chirac said.

Chirac said he had asked Prime Minister Jean-Pierre Raffarin to consult with business leaders and unions to come up with a new law on employment.

The call echoed past efforts to bring down unemployment. The previous Socialist-led government lowered the workweek from 39 to 35 hours, an attempt to force companies to hire more staff to keep productivity in line.

However, Chirac and business executives claim the shorter week has made France less competitive. One main complaint is that it puts strain on smaller businesses.

"The 35-hour work week was putting the brakes on activity," Chirac said. "It has been made more flexible," with parliament raising the limit on overtime hours and reducing benefit payments by employers. The statistics agency, Insee, said the number of unemployed dropped by 7,000 to just over 2.6 million in November. It used data standards set by the International Labor Institute.

Economists had expected the number of people out of work to rise by 10,000 to 15,000. Still, the overall jobless rate has climbed over the past year. It stood at 9.2 percent in November 2002.

The unemployment figures "let us hope that the structural policies of the government over the past 18 months are starting to bear fruit," Social Affairs Minister Francois Fillon said.

Some market watchers remained cautious. BNP Paribas economist Dominique Barbet said the figures were surprising, given modest growth and the delay between employment and output cycles.

"It's too early to judge whether the drop will continue . . . or whether we are just facing some odd data before the actual pickup of the labor market occurs," Barbet said.