By Matthew Bigg
PARIS (Reuters) - French President Jacques Chirac scrapped a youth job law on Monday after weeks of angry unrest, in a climbdown that undermined his prime minister and handed protesters victory.
Chirac's decision was a personal blow to Prime Minister Dominique de Villepin, who had championed the First Job Contract (CPE) as a vital job-creating reform of the French economy but had seen his popularity slump as mass opposition grew.
The government U-turn over the CPE makes it unlikely France will attempt broader reform of its highly-regulated labour market before 2007, some economists said.
Villepin said in a television address he regretted that the strikes and street protests showed the CPE could not be applied but gave no hints about his own political future, on the line over his handling of the dispute.
"The necessary conditions of confidence and calm are not there, either among young people, or companies, to allow the application of the First Job Contract," Villepin said, adding he would open talks with unions on youth employment.
http://today.reuters.co.uk/news/newsArticle.aspx?type=topNews&storyID=2006-04-10T152612Z_01_L09541867_RTRUKOC_0_UK-FRANCE.xml
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