- Unions blocking oil refineries in bid to stop change in law
- Fund lifts France’s 2016 growth forecast to 1.5 percent
The International Monetary Fund backed President Francois Hollande’s effort to modernize French labor laws even as unions resisted changes by blocking the nation’s oil refineries.
The law, named after Labor Minister Myriam El Khomri, eases restrictions on firing, replaces industry wide salary deals with company-level negotiations and reduces overtime pay. Hollande has used emergency measures to force it through parliament in the face of resistance from his own Socialist lawmakers.
“We think the El Khomri law is a big step forward,” Christian Mumssen, the IMF’s mission chief for France, said on Tuesday at a press conference in Paris. “It will help with hiring, it will help with competitiveness.”
The remarks offer some cover to Hollande, whose popularity has sunk to record lows as he battles with his own supporters to retool the French economy. The IMF raised its forecast for France’s 2016 growth to “close to” 1.5 percent from 1.1 percent in mid-April, citing stronger-than-expected consumer spending and investment.
Even so, the Washington-based fund said France has much further to go on improving its economic performance. Unemployment remains stuck above 10 percent, roughly double the level in the U.K. and Germany.
“Much of the unemployment in France is now structural rather than cyclical,” Mumssen said, presenting a report on the country’s outlook. “In the private sector there are still huge obstacles. The El Khomri law will help but we’re at 10 percent and it won’t bring it to 5 percent.”
Mumssen said he sees French growth averaging about 1.75 percent annually over the next five years, which is not enough to significantly dent unemployment or reduce the debt burden. While public debt is set to peak at 98 percent of gross domestic product in 2017, an economic shock could easily derail that trajectory and send it above 100 percent, according to the report.