New French PM Valls vows to cut labour costs, ease taxes

France's newly appointed Prime Minister Manuel Valls addresses members of the Parliament during his domestic policy speech, on April 8, 2014 at the French national assembly in Paris. France's new Prime Minister on Tuesday vowed to slash lab
France's newly appointed Prime Minister Manuel Valls addresses members of the Parliament during his domestic policy speech, on April 8, 2014 at the French national assembly in Paris. France's new Prime Minister on Tuesday vowed to slash labour costs by 30 billion euros (S$52 billion) and ease taxes in a bid to turn around the country's struggling economy. -- PHOTO: AFP

PARIS (AFP) - France's new prime minister on Tuesday vowed to slash labour costs by 30 billion euros (S$52 billion) and ease taxes in a bid to turn around the country's struggling economy.

Delivering his first policy speech to parliament since he took over as prime minister last week, Mr Manuel Valls said the measures were aimed at boosting competitiveness and increasing the spending power of consumers.

In a speech in which he vowed to "open a new chapter" for the Socialist government of President Francois Hollande, Mr Valls laid out a series of measures aimed at reviving the economy.

He said the 30 billion euros in reductions to employer payroll charges would be introduced by 2016.

Under the plan, employers would not have to pay charges for minimum-wage employees, something he called "a true revolution".

Mr Valls also promised 5 billion euros in tax cuts for "modest households", including minimum-wage earners.

He vowed to continue the "recovery" of the country's public finances, confirming 50 billion euros in budget cuts by 2017.

Mr Valls said the cuts included 19 billion euros from state spending, 10 billion euros from health insurance and 10 billion euros from local governments. He did not specify where the rest would be found.

"Of course we must straighten up our public finances but not by destroying our social model or our public services," he said.

"I am for respecting our commitments, for budget responsibility, not for austerity," he added.