The CGT and Force Ouvriere (FO) union federations said they would skip out on crucial roundtable talks slated for Tuesday because employers are winning out with 40 billion euros in tax credits over the next three years.
French President François Hollande opened the summit on Monday in a bid to win an agreement to create more jobs in exchange for tax and social benefit cuts for companies.
An important aspect of the talks is to slim down and simplify a 3,200-page labour code.
The timing is crucial as a record 3.38 million people are out of work in the eurozone’s second largest economy.
The unions have been incensed by Prime Minister Manuel Vall’s decision last week to defer a plan for early retirement by one year for those in strenuous jobs that was supposed to come into effect by January 2015.
This came after complaints from leading employers union Medef that it was too cost heavy, joining in on the chorus of a potential boycott last week.
Union officials have lashed out at Valls for not consulting with them before making key decisions on how to pick up France’s slumped economy.
Hollande’s government has promised to slash state spending between 2015-2017 to finance measures to make companies more competitive and to lure in investment.
Dubbed the Responsibility Pact, the scheme offers businesses 40 billion euros worth of cuts in taxes and social benefit charges in exchange for 500,000 jobs by 2017.
Unions have slammed the plan as an “austerity pact” and accuse Valls of cowering at the demands of big business.