Chirac jobs policy thwarted by rise in unemployment

MARY DEJEVSKY

Paris

The aggressive jobs-first policy of President Chirac's government appeared to have suffered an early setback yesterday when official figures registered the first rise in French unemployment for almost a year.

If the trend is confirmed, it will make it all the harder for the government to press ahead with the tough budget cuts required for France to enter a single currency. According to the Labour Ministry in Paris, there was an increase of 27,000 in the number of registered unemployed during August, a rise of 0.9 per cent to 2,939,100 from 2,911,700 in July.

Explanations offered for the rise varied from the anomalous nature of August - the main holiday month, when many industries are shut down and the zeal for job-seeking may be low - to a change in the way the figures are calculated. Although the change, introduced in July, was widely criticised by trade unions and others as meaning that official numbers would show a reduction, the old calculations would have produced a fall of 0.2 per cent in August.

Having changed the system of calculation, the government is stuck with it, and the political significance of the rise can hardly be overestimated. President Chirac and the Prime Minister, Alain Juppe, have placed reducing unemployment at the top of their priorities. It was a main plank of Mr Chirac's election campaign and the policy, above all, which is believed to have given him victory.

Mr Juppe's budget earlier this month was received with less enthusiasm by the international markets than he had hoped, largely because of his political need to equivocate about whether employment or cutting the domestic budget deficit was his chief aim. He ended up telling the public and political allies one thing - jobs; and economic specialists another - the deficit; leaving neither side satisfied and the Germans asking France for more assurances on their ability to meet the criteria for joining, and remaining in, a single European currency.

Mr Chirac's political opponents have long argued that it was too early to judge the results of the new government's policies and that the continuous fall in the rate of unemployment since last October was due more to the policies of the former Prime Minister, Edouard Balladur, than to any of the projects announced by Mr Juppe. That may still be true. Demography and August may also play a part.

But the rise offers an explanation for Mr Juppe's sudden change of tack last week when he launched a campaign against "scroungers" and "cheats" and called for more emphasis on the job-seeking obligation on benefit recipients.

Inevitably, it also cast doubt on the government's ability either to create jobs or encourage job creation. Moreover, jobs are being lost as well as created, including by the government.