France in crisis over jobs law

French Prime Minister Dominique de Villepin has been sidelined. President Jacques Chirac has been forced into a subtle switch of loyalties to save face. And the two leaders’ mutual rival, Interior Minister Nicolas Sarkozy, is now at centre-stage.

It was a worst-case scenario for the two leading men of France, bogged down in a crisis that has turned the streets into protest zones, hobbled high schools and universities and is now taking its toll at the top. For the brash Sarkozy, who wants to be president next year, it was like a campaign ad.

New strikes and demonstrations were set for tomorrow with calls to outdo a protest last week that put at least one million people in France’s streets. The Paris Metro, the national train service and others were already announcing scaled-back service.

The culprit is a youth jobs law that Villepin relentlessly tried to sell to restive students who took to the streets of France bringing unions and some teachers and parents with them. The law – which opponents want withdrawn - encourages hiring youths less than 26 by allowing employers to fire them without cause within the first two years.

For weeks, Villepin insisted that the measure was “well crafted.” It can be improved but not fundamentally changed, he said.

On Friday, Chirac stepped in to order two major modifications – reducing a trial period of two years to one year and forcing employers to explain any firings – in hopes of defusing the crisis. In so doing, he dealt a blow to Villepin, his one-time top aide and apparent choice as successor next year.

In an apparent first in France, Chirac signed the original measure into law this weekend, as promised, but also effectively suspended it with an order that it not be applied. Only the new, softer law in progress will count.

The 73-year-old president’s legal sleight of hand kept the law alive while a new one was in progress. But it also signalled that in the president’s eyes Sarkozy – who had stepped out of line to say he wanted the measure suspended - was right.

The blow to Villepin was redoubled by a decision to remove the making of a new law from the prime minister’s hands, turning the job over to parliament and the governing party, the Union for a Popular Movement, or UMP, which Sarkozy heads.

France is in a “regime crisis,” centrist leader Francois Bayrou said.

“That the government fades into the background to the benefit of a party president ... is a system that has never before existed,” said Bayrou, of the centrist UDF. “It is not democracy.”

Opposition Socialist lawmaker Jack Lang, a former culture minister, described the affair as “surrealistic.”

“The spectacle offered up by public officials is pathetic,” he said.

Sarkozy’s step up to the podium was clear Friday night. He praised Chirac’s decision in a formal intervention on national television – just minutes after the president’s solemn address to the nation.

“Our contact will no longer be the prime minister but the UMP lawmakers and ... Nicolas Sarkozy,” CFDT union leader Francois Chereque said Sunday.

Sarkozy immediately telephoned union leaders to try to initiate dialogue, and advanced a weekly meeting of the governing party’s executive commission to discuss a new law, his entourage said.

But there were no signs of a crack in the opposition.

“The object of (Tuesday’s) demonstration is repealing” the law, Chereque said on France-Inter radio. “There needs to be a lot of us, and we must go for the long haul since the parliamentary debate will take time.”

For Villepin and Chirac, there is no guarantee that the new law will be recognisable.

Bernard Accoyer, UMP head in the National Assembly, charged with writing up the new law along with his Senate counterpart, said on Radio J on Sunday that Chirac’s marching orders left room for manoeuvre, adding that there would be no taboos in talks with students and unions.

Villepin was particularly criticised for ramming the contested bill through parliament by using a special measure curtailing debate. Students and unions normally consulted on such issues said they had been circumvented.

The prime minister reiterated in the newspaper interview that, in a catastrophic situation for youths, speed was of the essence.

The measure is meant to cut a 22% unemployment rate among youths that reaches 50% in some poor, heavily immigrant neighbourhoods. Villepin cited the national statistics agency as saying it would create up to 80,000 new jobs at zero cost to the state.

On Sunday, Accoyer, the UMP parliamentary leader, conceded that the measure was “probably too quickly” adopted.

Urgent measures “give the impression that that you want to ... duck dialogue,” he said – yet one more slap at Villepin.