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Economy

France's Labour minister goes, Hollande's economic woes remain

media France's Labour minister, François Rebsamen at the National Assembly, March 18 2015 REUTERS/Charles Platiau

France's Labour minister announced on Monday he will resign from the government next week to become mayor of Dijon. Francois Rebsamen, who has been in the post for 16 months, leaves behind him a mixed record.

"I never dreamed of combining the jobs of labour minister and mayor of Dijon..." Francois Rebsamen told French daily Le Parisien on Monday.

"I know very well that one cannont combine the two and I never envisaged that," he added.

Rebsamen's departure from the government is in fact motivated by tough new rules-imposed by President François Hollande- which forbids French politicians to hold local and national offices simultaneously.

Yet it was also triggered by the death on July 27 of Dijon's former mayor Alain Millot.

"I promised Millot that I would return to Dijon if one day he was no longer there," Rebsamen explained.

The Labour minister was mayor of the French eastern town in Burgundy from 2001 to 2014, when he then joined the government.

Rebsamen has said he will hand in his resignation on August 19, after the next cabinet meeting.

Reacting to news of his resignation, Prime minister Manuel Valls said it was expected given the "relationship of trust and love" Rebsamen shares with the people of Dijon.

Valls nonetheless thanked him for his contribution towards tackling high unemployment.

Yet after 16 months in the job, Rebsamen leaves behind him 200,000 extra job seekers- who now need to prove they're actually looking for work- and a sluggish growth rate of only 0.3%, according to the latest figures by the Bank of France.

Financial daily Les Echos, reports that the growth rate is even worse than the previous two months, a sign that businesses and households are still weary about spending.

Economists estimate that annual growth needs to be1.5 per cent to bring down the jobless queues.

Unemployment in France remains stubbornly high at around 10 per cent. President Francois Hollande has said if he doesn't turn the negative trend around he will not seek reelection in the 2017 presidential elections.

He's thus pinning his hopes on two key reforms: the first, concocted by the Economy minister Emmanuel Macron, aims to open up France's economy. While the second, known as the Responsibility Pact, is a deal with big business to create jobs in return for tax breaks.

Yet the latter has sparked outrage among leftists within Hollande's Socialist Party, who consider the pact a free gift to companies, especially after the government scrapped a controversial 75% wealth tax earlier this year.

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