By Brian Love

PARIS (Reuters) - France's main employers federation launched a withering attack on draft labor regulations on Thursday, saying changes made to reduce union opposition meant the proposals had become so convoluted they would not help create new jobs.

President Francois Hollande, who faces an election in 10 months' time, wants hiring and firing made easier to tackle high unemployment. A bill is set to go before the lower house of parliament for the last time next week despite the strong opposition from hardline trade unions, which argue it erodes workers rights.

The Medef group's salvo came hours after unions rejected last-ditch government amendments to the bill, which hands more power to companies in the setting of pay and work conditions. The unions said the changes were insufficient.


"This law will do absolutely nothing for employment," said Pierre Gattaz, leader of the Medef employer federation. "It makes things even more complex and nobody understands it anymore."

"France's problem is that we need to keep lowering workers' costs, stifling taxes. And we need to make life easier for our small and medium sized companies."

Hollande and the unions have been locked in a sometimes violent four-month showdown over the bill, which has also fueled a rebellion in his Socialist Party.

The tweaks proposed by the government on Wednesday sought to assuage their fears of losing clout, but were rapidly rejected as insufficient to maintain standards of labor protection achieved by sector-level bargaining.

"The government remains deaf to our proposals," the CGT and six other unions said in a joint statement on Thursday.

In comments published by Le Parisien newspaper, CGT chief Philippe Martinez said: "This will play out in the streets."

Turnout at union-led street rallies has fallen sharply even though there remains widespread opposition to the reforms.

Hollande and his government refuse to abandon the bill, which has split the ruling Socialist Party's traditional left from more reform-minded allies of the president.

His government forced it though the lower house of parliament by decree, through a constitutional clause known as 49:3, in the face of a rebellion at its first reading.

Hollande said he would do the same again if dissident Socialist lawmakers maintain their opposition when the bill returns to the National Assembly for a final reading on July 5.

"Let there be no doubt on this. The law will be voted on and signed off on time. I would like to see majority backing for it. Short of that, it will be a case of recourse again to article 49:3," he told Les Echos newspaper.

(Additional reporting by Jean-Baptiste Vey and Emmenuel Jarry in Paris and Claude Canellas in Bordeaux; Editing by Richard Lough and Catherine Evans)

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