France's powerful unions agreed to labour law reforms on Friday giving more flexibility to employers, who say the country's strict laws are stifling the economy. The deal allows for greater latitude in cutting salaries and firing staff.

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French President Francois Hollande led a chorus of approval after unions and employers reached a deal on reforms to the country's complex labour laws after more than three months of talks.

The measures are designed to give more flexibility to employers who have long complained of the red tape strangling the French economy.

But it will also offer more protection to employees, a key concern of France's unions.

The national agreement requires the support of at least three of the five main union confederations for it to be ratified: late Friday, three of them appeared to back it, the other two strongly opposed.

Hollande welcomed the agreement as a success for social dialogue.

"This agreement will mean new advances for the workforce," he said, calling on the government to press ahead with getting the proposals drawn up into a bill.

Both the unions and employers are due to formally approve the deal in the coming days. But leaders on both sides seemed satisfied with the agreement and ready to recommend it to their respective constituencies.

If that happens, the measures will go before the French cabinet on March and from there to parliament, with the government hoping it can be entered into law by the end of May.

Prime Minister Jean-Marc Ayrault expressed his satisfaction at the breakthrough, saying it struck a "balance between the security needed by workers and the adaptability that companies need".

Laurence Parisot, head of the employers federation MEDEF, said the deal "marks the arrival of a culture of compromise after decades" of antagonism.

And Laurent Berger, general secretary of the CFDT trades union, also welcomed what he called "an ambitious agreement" and said it would boost employment.

Another union leader, Joseph Thouvenel of the CFTC, said that what they had obtained was not perfect, but he would nevertheless give a favourable report on it at a meeting of his union's executive next week.

Marie-Francoise Leflon of the CFE-CGC union described the agreement as a balanced deal.

The other two main trades unions, the CGT and Force Ouvriere (FO), both came out against the deal.

"It's a dark day for employees' rights," said Stephane Lardy of FO, denouncing the deal.

Talks had dragged on between unions and three employers federations since October 4.

The breakthrough appeared to come on Friday when the employers backed from tax measures on contract workers that had become a deal-breaker with the unions.

The deal allows employers to cut working hours and salaries during hard times as well as making the process of laying off staff both less costly and less complicated.

On the other side, employees gained more rights, including better health cover and unemployment benefits.

The deal will come as a welcome relief to the Socialist government.

France is one of the last countries in Europe to reform its labour market in this way and has been under the scrutiny of the international ratings agencies for some time.

Hollande has stressed the need for social dialogue as the key to economic reform.

(AFP)

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