French Labor Law Negotiations End With New Ultimatum

Unions and student groups -- in a position of strength after two months of demonstrations that have drawn millions into the street -- have threatened more mass protests unless the measure is abrogated by the end of next week.

The main UNEF student union pressed on with its campaign against the First Employment Contract (CPE), which makes it easier to fire under-26 year-olds, announcing a new day of nationwide action on Tuesday.

President Jacques Chirac has already effectively suspended the contested measure, asking the ruling Union for a Popular Movement (UMP) to draw up a new law after consulting leaders of the protest movement.

Commentators said President Jacques Chirac's government appeared to have all but given up on the youth contract, but was looking for a way to repeal it without losing face.

"How to come up with a measure that looks, tastes and acts like an abrogation, but is not called an abrogation?" summed up an editorial in the left-wing Liberation newspaper.

UMP lawmakers Friday held the last of three days of meetings with unions and student groups, as well as the MEDEF employers' association and the CGPME small business federation.

One union, Solidaires, said after meeting the UMP that the party "understood the urgency" of the situation, but that no definitive announcement would be made before Monday.

Business leaders warn of danger to the economy

MEDEF head Laurence Parisot warned Friday that the protest movement -- in which students have targeted transport and industrial sites -- risked harming the French economy. "We must do everything to quickly end this crisis, which is costing our country dearly," she told France 2 television.

Prime Minister Dominique de Villepin's authority has been badly undermined by the labor conflict, and his chances as a presidential candidate all but destroyed, although on Thursday he ruled out resigning over the crisis.

Humiliatingly for Villepin, responsibility for negotiating a way out of the crisis has been handed to his powerful rival, UMP chief and Interior Minister Nicolas Sarkozy.

Commentators say that many supporters of Sarkozy in the UMP are angry at Villepin's handling of the reform and feel little attachment to the CPE.

Sarkozy allies call for CPE to be scrapped

On Friday, former minister Roselyne Bachelot -- a Sarkozy ally and senior UMP official -- became the latest party figure to call openly for the CPE to be scrapped.

Conceived as a tool against youth unemployment, which runs at 22 percent in France, the CPE is a contract for under 26-year-olds that can be terminated by the employer without explanation during a two-year trial period.

It provoked a massive backlash, with Villepin accused of trampling on hard-won labor rights, and a sometimes violent protest movement in which more than 3,500 people have been arrested.

Students continued to stage wildcat protests on Friday to keep up the pressure on the government, blocking roads and public transport in Paris and several cities including Nantes in the west and Bordeaux in the southwest.

Widespread unrest and demonstrations across France

In Paris, nine people were slightly injured when a driver -- apparently intentionally -- rammed into a group of student protestors on the Boulevard Saint Michel.

In Le Havre in the north, around 400 students occupied the offices of a UMP deputy before heading to the courtroom and city hall to press their demands.

Student leaders called for large-scale protests to resume on Tuesday, saying they were determined the movement would not fizzle out with academic holidays -- which start Friday in a third of the country.

There have been mounting calls for work to resume at disrupted schools and universities to let students prepare for end-of-year exams.