France promises new labour reforms as EU gives guarded reprieve

By Ingrid Melander PARIS (Reuters) - France announced plans for fresh labour reforms on Wednesday, and the European Commission granted it a new two-year delay to meet an EU deficit target but gave Paris three months to do more to revamp its economy and finances or face sanctions. A years-long standoff between Paris and Brussels has seen French leaders repeatedly miss deficit-cutting targets, arguing excessive budget cuts would undermine efforts to kickstart economic recovery. Prime Minister Manuel Valls said he wanted new labour rules adopted in parliament by the summer, with moves to ease worker representation rules and reduce bureaucratic hurdles that hamper company growth once they hire 50 or more workers. "Our country needs reforms," Valls said, presenting his new reform plan to labour unions and business group leaders who failed to strike a deal earlier this year on labour regulations despite months of negotiations. "The government will assume its responsibilities to keep pushing ahead with reforms," Valls said, an hour before the European Commission announced it was giving France a reprieve while putting it on a short leash. Valls said the government would unveil the draft bill by early April but did not say when he expected it to be adopted. Parliament goes into recess for July and August, but extraordinary sessions then are possible. France has long exasperated its EU peers with repeated fiscal slippages and reform efforts judged too modest. Although it avoided an immediate sanction on Wednesday, it must come up quickly with reforms worth an extra 0.2 percent of GDP to reach an EU target of cutting its structural deficit, which excludes cyclical effects, by 0.5 percent of GDP in 2015. "France will respect its commitments to make such an adjustment (of its deficit) in 2015," Michel Sapin said in a statement. Failure could lead to sanctions when the Commission re-examines its budget and reform plans, Valdis Dombrovskis, European Commission vice president told a Brussels news conference. Last week the government adopted a decree to push through a reluctant parliament reforms aimed at liberalising various professions and relaxing shop trading hours. The Commission welcomed the bill as a first step but said more was needed. But any further labour reforms could face resistance from increasingly vocal rebel Socialist lawmakers. Valls also called on employer and labour groups to quickly launch negotiations on the country's indebted unemployment benefit fund - another reform urged on France by Brussels. Paris argued that it needed a two-year reprieve on cutting its deficit in order to protect its efforts to return to growth. Consumer confidence rose to its highest level in nearly three years in February and the jobless total fell slightly in January, data showed on Wednesday, adding to signs France has started to slowly lift itself out of stagnation. (Additional reporting by Emmanuel Jarry, Nick Vinocur and Jean-Baptiste Vey; Editing by Mark John and Jon Boyle)