- Associated Press - Sunday, November 4, 2012

PARIS — The 35-hour work week? Untouchable. The social safety net? Untrimmable.

So how on earth can France’s Socialist government keep its promise to make this country, and Europe, more competitive in the global marketplace?

Slowly and carefully, says President Francois Hollande.

After meetings with world finance chiefs last week, he acknowledged “there are measures to take” on reducing the cost of labor in France, among the world’s highest; but he argued they “should be spread out over time.”

Many economists say France could be running out of time, however, and the economic crisis could have repercussions beyond its borders.

Paris has allied with Berlin to manage the crisis in the 17-nation eurozone crisis, but France’s huge state debts and chronic unemployment are making it look increasingly like struggling Spain.

The head of the World Trade Organization said that “it’s particularly urgent” for France to loosen up its economy.

“This link among growth, competitiveness and jobs … is the major problem of France and to a certain degree Europe right now,” Pascal Lamy told Mr. Hollande at the meeting of the finance ministers.

The French government is hoping that gradual change is the way to go and that a series of private meetings and cautious public statements in recent days will mollify both fearful workers and employers who say it’s no longer worth the cost to hire.

“It’s not going to be a question of shocking or brutalizing the French economy,” Economics Minister Pierre Moscovici said. “It’s going to be continuous action, spread over our entire mandate.”

After Mr. Hollande was elected in May, the Socialists’ first response to France’s lagging economy was to add a layer of government: the Ministry of Industrial Recovery. That failed to reduce unemployment or keep some of France’s biggest corporations from announcing thousands more layoffs. They included carmaker Peugeot Citroen, Air France and retail giant Carrefour.

Mr. Hollande then asked one of the country’s most respected businessmen, former Airbus chairman Louis Gallois, to spend months drawing up plans to make France more competitive. But the government swiftly distanced itself from the report, as news leaked last month about the report’s recommendations, which included rethinking the controversial 35-hour week, shifting some of the tax burden to workers and cutting public spending.

“I’d advise against the idea of a shock, which has more of an attention-getting effect than a real therapeutic effect,” Mr. Hollande said.

Without offering details, he added that he would prefer a “pact” among the government, workers and employers.

France has only to look south to neighboring Spain for reasons to go slowly with major labor reforms. Spain, facing the possibility of default on its debts, had little choice but to impose stark reforms, but the results have been dire. Tens of thousands of people joined anti-government protests as unemployment hit 25 percent.

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