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1. The Committee took note of the Government's report for the period ending May 1997, which contains information in response to its previous observation. It also notes a communication from the General Confederation of Labour (CGT) sent by the Government in August 1997. The Committee notes with concern that the information supplied by the Government and the most recent data published by the OECD reveal the persistence of a high level of unemployment. Although the upturn in economic activity led to employment growth of 1.2 per cent in 1994 and 0.9 per cent in 1995 and brought down the unemployment rate to 11.7 per cent in 1995 as compared to 12.3 per cent in 1994, this slight improvement in the employment situation has not been continued. With the slow-down in growth and the continued 0.8 per cent annual increase in the active population, employment again declined in 1996, while the unemployment rate reached 12.4 per cent, which is considerably higher than the average rate in the European Union, as the CGT stresses. Furthermore, long-term unemployment continues to account for almost 40 per cent of total unemployment, and the unemployment rate among young people under the age of 25 is over 30 per cent despite the continued decline in the participation rate of this age group. The CGT also draws attention to the growing proportion of various forms of precarious employment, including involuntary part-time work.

2. The Government states that unemployment is still the main challenge facing the economy, even if growth has become structurally more abundant in terms of jobs. It stresses that the present budgetary and monetary polices provide the conditions for growth with job creation. The fact that inflation is under control and external surpluses remain high shows that the economy is competitive, and this, together with the effort to improve public finances, creates the necessary conditions for a sustained drop in interest rates conducive to investment and consumption. In this context, the Government indicates that the main aspects of its employment policy concern improving enterprise competitiveness through lower labour costs, job sharing through the organization and reduction of working time negotiated by the social partners, the promotion of personal service jobs through tax incentives and support to the development of small and medium-sized enterprises.

3. Disagreeing entirely with the Government's analysis, the CGT describes as "deflationist" the policy conducted to satisfy the criteria for access to the single European currency. Seriously affecting employees, wage adjustments and heavier taxation, so as to remedy the poor state of the public finances, are preventing a return to growth of domestic demand. While investment by enterprises is declining, at the same time profits are increasing. The trade union considers that a policy which pursues the employment objectives of the Convention must involve an increase in incomes in order to stimulate demand, a substantial reduction in working time and priority for investment in training and research. The Committee, for its part, regrets to note that progress made in redressing the macroeconomic balance, which the Government presents as a prerequisite for a sustained return to growth and employment, has not yet been reflected in an improvement in the labour market situation.

4. The Committee also notes that the CGT refers to the first measures taken by the Government since June 1997 with regard to employment policy. It notes in particular that a conference on wages, employment and the reduction of working time was to begin in September 1997. It also notes the adoption of Act No. 97-740 of 16 October 1997 concerning the development of activities for the employment of young people. The Committee would be grateful if the Government would provide detailed information on the new measures taken or envisaged and their effect, either noted or expected, on the employment situation. More generally, it asks the Government to indicate how the principal measures are decided on and kept under review "within the framework of a coordinated economic and social policy", to ensure that the promotion of full, productive and freely chosen employment remains a "major goal", in accordance with Articles 1 and 2 of the Convention.

5. In its report the Government gives a detailed description of the various active labour market policy measures, which, however, concern only 1995. The CGT considers that these measures, whose cost is considerable, are ineffective in terms of reducing unemployment and contribute to the development of precarious forms of employment. The Committee notes in this connection the main conclusions and recommendations of the independent evaluation body set up by the Five-Year Act of 20 December 1993 respecting labour, employment and vocational training. With regard to "employment-solidarity contracts" and "back-to-work contracts" (replaced in 1995 by "employment-initiative contracts"), the above body notes that, in more than 50 per cent of cases, people were recruited without assistance, which leads it to question the relevance of such arrangements and to recommend that results should be constantly evaluated in terms of their ultimate objectives (reducing unemployment among young people, for example) rather than the number of subsidies allocated. With regard to measures for lowering the cost of labour by reducing contributions on low wages, the above body stresses that such measures cannot solve on a lasting basis the difficulties encountered by the least skilled workers. Furthermore, the evaluation highlights the contribution of such measures to the development of a segment of the labour market in which employment conditions are less favourable than those offered by wage employment under the ordinary law. Generally speaking, the above body notes that these measures are unstable and frequently modified, and account is not always taken of available assessment findings. The Committee notes that these conclusions and recommendations are largely consistent with its own concern, which it has been expressing for years, that the various labour market policy programmes should be regularly assessed and adapted in the light of their contribution to the effective and lasting integration of their beneficiaries in employment. It asks the Government to describe the measures taken to this end in its next report.