French Government Backs Down and Drops New Jobs Law

PARIS —  Caving in after two months of protests by students and labor unions, the French government on Monday scuttled portions of a new labor law that had been intended to cut unemployment by making it easier to hire and fire young workers.

A weary Prime Minister Dominique de Villepin, who staked his political reputation on the law, announced the decision after a weekend of infighting and negotiations in his divided government.

“The conditions necessary for trust are not present either on the side of the young people nor on the side of businesses to permit the enactment of the contract,” De Villepin said in a televised statement. “I wanted to act quickly because the dramatic situation and despair of many young people required it.... I regret this was not understood by everyone.”

The government will try to end the crisis by eliminating the two central changes in the proposal: a two-year probationary period for employees under 26 and the ability to fire the employees without justification during that period.

De Villepin had argued that making regulations more flexible would encourage employers to take a chance on new hires, especially in areas with many immigrants, where unemployment reaches 50%. But critics accused him of wanting to dismantle hard-won job security safeguards.

The announcement Monday made it clear that De Villepin and President Jacques Chirac, his mentor, had failed to come up with a face-saving alternative during this weekend’s discussions within the ruling center-right coalition. The legislation seemed doomed since March 31, when Chirac said he would enact the law but also promised to modify its most disputed aspects.

“It’s time to bring down the curtain on this ridiculous farce,” said Jack Lang, a leader of the opposition Socialist Party. “This conflict revealed a profound regime crisis.”

Despite escalating and occasionally violent marches and strikes, De Villepin had insisted that he would stand firm. His popularity plummeted by half to a record-low 25% in polls. He lost the all-important support of Chirac, who appointed him a year ago in hopes of positioning De Villepin as a presidential candidate in next year’s elections.

De Villepin, who has never run for office, tried to present himself as a courageous leader determined to streamline a costly welfare state blamed for economic stagnation and willing to confront entrenched left-wing forces to make it happen. Instead, analysts said, the crisis hurt him and strengthened his rival and fellow presidential hopeful, Interior Minister Nicolas Sarkozy, who was dubious about the law despite his free-market reformist bent.

“The situation is a real failure” for De Villepin, said Jacques Capdevielle, research director at the Political Science University here. “He wanted to pull the rug out from under Sarkozy by looking like a great reformer, and now the situation has reversed itself. Today Sarkozy, who once looked like an extreme free-market liberal, is the man of compromise and dialogue.”

The government’s reversal of course was primarily a victory for two forces in a society that doggedly resists globalization: students and labor unions.

It was not the first time that the Chirac-De Villepin team gambled and lost. Last year, voters rejected a proposed constitution for the European Union, a resounding rebuke to a government that sees itself as a leader of European unity. In 1997, Chirac called early elections at De Villepin’s urging to consolidate his legislative control and instead was forced to share power with a center-left government for five years.