French President Francois Hollande smiles at the Elysee Palace on March 26, 2014, in Paris, after the weekly cabinet meeting. AFP PHOTO / ALAIN JOCARDALAIN JOCARD/AFP/Getty Images

President François Hollande has opened a new front in his bid to deepen reforms of France’s sclerotic economy, seeking to persuade squabbling trade unions and employers to agree a simplification of the country’s maze of labour market rules.

Mr Hollande on Monday convened a conference of “social partners” aimed at adding labour market changes to the pro-business programme of more than €40bn in tax relief and €50bn in public spending cuts he has adopted in an effort to boost stalled growth and stimulate employment.

“With growth so weak and unemployment so high, we have to get around the table to find solutions,” Mr Hollande told the conference. “We are at a moment where the future of France is in play.”

Greater labour market flexibility is one of the key reforms urged on Paris by the EU and other international organisations anxious to see Europe’s second-largest economy get back into gear.

The run-up to the talks was marked by mutual threats of a boycott by both employers’ organisations and some unions, as they argued bitterly over the terms of Mr Hollande’s policy shift, first outlined in January and now going through a painful process of implementation.

Union leaders, backed by rebels in Mr Hollande’s ruling Socialist party, have complained bitterly that the government is giving handouts to business in the form of tax relief, while stepping up austerity policies.

Two of the seven union organisations said on Monday they would boycott the talks. The communist-backed CGT and the Force Ouvrière, both radical unions, indicated they would not attend the second day of the conference when negotiations were due to start in earnest.

Employers’ groups have meanwhile resisted government demands for assurances on job creation in return for the tax cuts. Led by Medef, the business confederation, eight employer organisations issued an “alarm call” in an open letter to Mr Hollande last week, calling on him to accelerate the implementation of the “responsibility pact”, as the president has dubbed his reforms.

Mr Hollande said business was moving too slowly to agree obligations on investment, employment and training under the pact and said a special committee would meet in the autumn to check commitments were being met.

The employers only agreed to participate in the social conference after Manuel Valls, the reformist prime minister, promised a delay in the implementation of recent legislation to increase company pension contributions for those in jobs deemed to involve physical or other hardship, and imposing a standard 24-hour minimum weekly contract for part-time working.

Mr Valls made clear the government wanted to see the latest round of talks, set to last several months, come up with a simplification of France’s 3,000-page labour code and to reform the system of thresholds that impose a series of obligations on companies according to the number of people they employ.

Companies that employ more than 10 people pay higher social charges and must have elected workers’ representatives; these conditions multiply again for companies with 20 or more workers and companies with 50 or more must satisfy 35 new obligations, including having a workers’ council, a health and safety committee and compulsory annual collective bargaining.

Union leaders deny these thresholds damage employment, but public and private studies have suggested they may hold back as many as 140,000 potential jobs. The CGPME, which represents small and medium-sized business, says France has more than two times as many companies with 49 employees than with 50.

Aside from these issues, Mr Hollande wants the social partners to agree ways to double the number of apprenticeships to 500,000 a year by 2017, as part of a broader effort to tackle youth unemployment, running at more than twice the national jobless rate of 10 per cent. The number of apprenticeships shrank by 8 per cent last year.

Mr Hollande announced a separate round of talks to tackle long-term unemployment.

The social conference is the third since Mr Hollande came to power in 2012. The first led to a deal that enhanced flexibility for companies to adjust wages and working hours during downturns and some loosening of dismissal terms that has cut the number of judicial disputes over redundancies.

The second produced a reform of the pension system that increased pension contributions by employers and employees – but which was widely criticised for not doing enough to address a €20bn pension funding gap.

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