April 1 (Bloomberg) -- French President Jacques Chirac's offer to weaken the most disputed parts of a new youth-labor law failed to stem mounting opposition as union and student leaders vowed additional protests next week.

``It's incomprehensible and unacceptable,'' Jean-Claude Mailly, general secretary of the Force Ouvriere union, said in response to Chirac's proposal. Bernard Thibault, secretary general of the CGT union, said that ``we have even more reasons to mobilize.''

Rejecting pleas from members of his Union for a Popular Movement Party and a coalition of students, labor unions and opposition politicians to hold off, Chirac said in a nationally televised speech last night that he'd sign the law. He also said he'd ask lawmakers to pass new legislation to placate critics.

The opposition risks damaging Chirac's party ahead of presidential elections next year. Polls this week showed six percent support the law and that Prime Minister Dominique de Villepin's approval rating sank below 30 percent.

Students in major cities including Paris, Marseille and Rennes demonstrated last night even as the president spoke, demanding the repeal of the law. Another protest is scheduled for tomorrow in Paris.

Chirac's refusal to back down leaves France in ``an unprecedented situation,'' Bruno Jeanbart, a deputy director at polling company CSA, said in an interview. ``Unions will be up against the wall. Whatever the outcome, the political stain will remain on the popularity of the president and the prime minister for a long time.''

`I Want to Respond'

De Villepin's law, passed by parliament March 9, introduces a labor contract, known by its French acronym CPE, which allows companies to fire employees younger than 26 without a stated reason during a two-year period.

Chirac said he wanted a new law to cut the probation period to one year and require employers to give a reason for dismissal.

Between one and three million people demonstrated across France March 28, and police fired tear gas as violence broke out when some protesters refused to disperse. Subsequently, students blocked rail lines and highways in cities including Paris and Marseille. New demonstrations are planned for April 4.

``I have heard the worries, I want to respond,'' said Chirac, 72, in a nine-minute address from his office in Paris. The law ``can be a useful instrument'' in cutting youth unemployment.

``We haven't been heard,'' said Bruno Julliard, head of student union UNEF. ``We don't want the CPE.''

`Wise Move'

The law caused a rift in the government, leaving de Villepin increasingly isolated as he resisted calls to delay or drop the law.

De Villepin sparked speculation he may be pondering resignation when he referred in Parliament on March 29 to an awaited decision on the law by France's highest court as a ``demission'' -- meaning resignation in French. When he realized his slip, he restated his sentence with the word ``decision.'' The following day the court backed the law, paving the way for Chirac to sign it.

The premier, named to his post 10 months ago, told Chirac he would resign unless he received the president's full support, Le Parisien newspaper reported yesterday, without saying where it got the information.

`Defuse the Crisis'

Concerned that the standoff might undermine his bid to win next year's presidential election, Interior Minister Nicolas Sarkozy, who heads the governing Union for a Popular Movement Party, had urged Chirac to delay implementing the law, allowing for new talks.

Sarkozy praised Chirac for aiming to strike a ``wise'' compromise and seeking to ``defuse the crisis.'' He also hinted at the government's possible exit strategy, saying that the law ``wouldn't be applied until the text is modified.''

Five of France's biggest unions urged Chirac to send the CPE back to the parliament for a second vote. They have declined an invitation from de Villepin to talk, demanding the law's repeal as a condition for dialogue.

Socialist Party leader Francois Hollande said Chirac ``missed the point, when he should have calmed things down.''

Sixty-seven percent of the French say the government should suspend the CPE to start talks with unions, an Ipsos SA poll for LCI television showed March 30. Only 6 percent of the 804 people polled by Ipsos on March 29 said the CPE should be kept as is.

More Flexible

The current protests follow three weeks of clashes in the underprivileged suburbs of French cities last November. The CPE was designed by de Villepin to address youth unemployment.

De Villepin says the new law makes France's labor market more flexible and is needed to counter unemployment of 9.6 percent nationwide and 22.2 percent for the young. Students say it reduces job security.

The prime minister's approval rating fell 7 percentage points this month to 29 percent, the lowest since he took office, a CSA/La Vie/France Info poll of 1,003 eligible voters showed yesterday.

Chirac has heeded street protests in the past. As prime minister in 1986, he withdrew an education bill after a student died in a clash with police. In 1996, during his first presidential term, he revoked a law overhauling the welfare system after three weeks of strikes in the transport system crippled the economy.

To contact the reporter on this story: Emma Vandore in Paris at evandore@bloomberg.net.

Last Updated: April 1, 2006 03:28 EST