French business leaders on Thursday applauded President Emmanuel Macron's overhaul of the labour code, a signature reform that will test his ability to force through change and face down protests.

The 39-year-old centrist sees overhauling France's rigid labour regulations as key to tackling the unemployment rate, currently 9.5 percent in France, roughly twice the level of Britain or Germany.

The head of the employers federation Pierre Gattaz welcomed the reform as "an important first step in the building of labour laws which are in step with the daily reality inside our companies."

The measures unveiled Thursday are aimed in particular at helping small businesses by allowing bosses to negotiate contract terms and conditions directly with their employees without union involvement.

They also cap the sometimes prohibitive costs of firing employees by limiting court awards for unfair dismissals and make it easier for multinationals operating in France to lay off workers.

Presenting the changes, Prime Minister Edouard Philippe called them "ambitious, balanced and fair" and said they would help France "make up for lost years" of mass unemployment.

"There are differences. We accept them," Philippe said at the end of three months of talks with trade unions and business leaders, which ended with the latter group sounding the happiest.

The CPME small business group expressed satisfaction with the plan, while unions gave it a mixed reception.

The moderate CFDT union said it was "disappointed" by some of the proposals, as did the hard-left Force Ouvriere (FO) union.

But crucially from Macron's perspective, neither said they would recommend their members join planned street protests next month by the Communist-backed CGT, France's biggest union.

- 'French hate reforms' -

The reform is a pivotal part of Macron's domestic agenda and the first step of planned overhaul of France's social system, which is set to include other changes to unemployment benefits and pensions.

The former economy minister campaigned on a promise to encourage entrepreneurship in France, pledging to make the country a better place to do business, in the mould of Germany and Scandinavian countries.

"We are the only major economy in the European Union that has not defeated mass unemployment for more than three decades," he told Le Point magazine in an interview published late on Wednesday.

His European partners are watching closely to see if he can succeed where others have failed.

Macron warned last week that "the French hate reforms" and that what he was proposing was a "profound transformation" to boost the country's global standing.

- First major protests -

The moves will bring the first demonstrations against his government, with the CGT union and the new leftist France Unbowed party calling for protests on September 12 and 23.

Philippe Martinez, the head of the CGT, said Thursday that "all our fears have been confirmed" by the announcements, which come as Macron's approval ratings have fallen sharply.

Recent polls showed that only around 40 percent of French voters are satisfied with his performance in office, with analysts attributing the disaffection to a mix of communication problems and political missteps.

Eager to produce results quickly, Macron has fast-tracked the labour reform via executive orders.

French labour law is enshrined in a thick red book that runs to around 3,000 pages, covering everything from health and safety to contract law, bonuses and pensions.

Macron aims to hugely simplify it, codifying basic employment protections in law but leaving companies, trade unions and employees to negotiate much of the rest, giving them greater flexibility.

The executive orders will be adopted by the government next month.

They must be ratified by parliament afterwards but are nearly certain to pass given the large majority of the president's centrist Republic on the Move party.

Patrick Thiebart, a labour specialist at the law firm Jeantet, said that the changes "allow France to regain real competitiveness" by giving companies flexibility while retaining an important role for trade unions as negotiating partners.

- Leftwing opponents -

The overhauls are likely to provide fresh ammunition for opponents of Macron who accuse the former investment banker of pandering to business owners with his programme, which also includes cuts to taxes and public spending.

Radical left France Unbowed leader Jean-Luc Melenchon, who finished fourth in this year's presidential election, has called for a mass march against what he describes as a "social welfare coup d'etat".

"Macron, president of the rich?" asked a front-page headline in the left-leaning Liberation newspaper this week.

Source: AFP