Sarkozy unveils plan to protect jobs from crisis

News of mass layoffs at household-name French companies from carmaker Renault to mail order retailer La Redoute has put pressure on Sarkozy to match his 360 billion euro ($450 billion) rescue package for banks with a plan to help ordinary people.

Sarkozy promised to ease restrictions on the use of short-term job contracts by small and medium businesses, fund an additional 100,000 subsidised work contracts in next year's budget, extend the use of subsidised training programmes and make it easier for people to work on Sundays.

"This is the third stage in our global plan to respond to the crisis that France, along with the rest of the world, is facing," Sarkozy said during a speech at a job centre in the northern town of Rethel, which has a very high jobless rate.

The first two stages were the bank rescue package and measures to help small businesses, announced last week.

"The third stage is to mobilise in favour of employment. It concerns employees directly, especially those who feel under threat in their jobs," Sarkozy said.

Hours before his announcement, official data showed consumers were fearful of a sharp rise in unemployment and companies expected business to worsen in coming months.

"The ghost of unemployment has returned to haunt France," declared Gilles Moec, an analyst at Bank of America.

"CYNICAL AND OPPORTUNISTIC"
Unemployment was already on the rise before the financial crisis sharpened last month, with the latest data showing a jump in the number of jobless in August to close to 2 million. Since then, the credit crunch has darkened economic prospects.

The unemployment rate in France and its overseas territories rose to 8 percent in August from 7.8 percent in July, according to the latest official European Union data, and analysts expect much sharper increases for the rest of this year and in 2009.

Sarkozy warned companies against what he called "cynical and opportunistic strategies."

"I'm thinking of those who might take advantage of the crisis to reduce activity and staffing for reasons that have nothing to do with the crisis. Those who want to play that game be warned: the government will be ruthless," Sarkozy said.

France is struggling with a big budget deficit and Sarkozy's rescue package for banks has caused widespread surprise in the French public after he said earlier this year that his margin for manoeuvre was limited because "state coffers are empty".

Having found 360 billion euros for the banks, Sarkozy came under pressure from public opinion to help workers too.

"Some of you may wonder why we helped the banks. Why help banks rather than small and medium enterprises, which create jobs and have financing problems more difficult than for banks? Or why not share out money directly to workers?" Sarkozy said.

"To those of you who think that way, I answer that the plan (to shore up banks) is actually designed for small and medium businesses, for workers, for growth, for employment. It's not designed for banks," he said.

Data showed earlier that consumer morale in October slid back to the July level which was a 20-year low, while company managers surveyed in a quarterly report highlighted accelerating job cuts between July and September, warning of worse to come.