France urges firms to avoid virus layoffs via part-time schemes

France's prime minister on Monday called on companies to negotiate part-time work accords with employees, financed in part by the state, to avoid outright layoffs as the Covid-19 crisis hammers the economy.

"I strongly encourage you to sign a massive number of long-term partial activity agreements within sectors and companies, and very quickly, between now and November 1," Jean Castex said during a visit to a factory east of Paris.

For companies that sign up, the government will pay 93 per cent of an employee's net salary even if they are no longer working full time. The scheme is scheduled to run at least until next summer.

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The government has already spent billions of euros to keep paying most of the salaries for people who otherwise would have been dismissed during the coronavirus lockdown from March to May this year, and the subsequent business slump.

The goal is to limit unemployment that is expected to reach 9.5 per cent by the end of 2020 after 715,000 jobs were lost during the first half of this year.

France has unveiled plans to spend a further 100 billion euros ($119 billion) to help the economy recover, but "this will work depending on one single condition: your total mobilisation," Castex said.

Already 345 part-time agreements have been signed between employers and staff bodies since March, saving 50,000 jobs overall, according to the labour ministry.

"These accords also allow you to organise professional training for your teams when they are unemployed," Castex said.

The government estimates the economy will contract by 11 per cent this year, though Finance Minister Bruno Le Maire has hinted that officials are preparing to release a less pessimistic number this month.