PARIS • French President Emmanuel Macron's government has unveiled a major overhaul of the labour code, a signature reform that will test his ability to force through changes and face down protests.

The 39-year-old centrist sees overhauling France's highly protective, rigid labour regulations as key to creating jobs.

The measures are aimed in particular at helping small and medium-sized enterprises by curbing the power of unions, limiting unfair dismissal awards and allowing bosses to negotiate more working terms and conditions directly with their employees.

Unveiling the changes at a press conference yesterday, Prime Minister Edouard Philippe and Labour Minister Muriel Penicaud set out plans to give French companies more power to negotiate hours and pay and slash the number of workers' committees.

The measures also call for judges to take into account only a company's financial situation in France, and ignore profits it may be making abroad, when ruling on layoff plans.

"No one can say that our labour code as it stands now promotes employment," Mr Philippe said. "Our labour code is seen by foreign investors and by small company bosses as a deterrent to hiring."

Calling the changes "ambitious, balanced and fair", he said they would help France "make up for lost years" of high unemployment.

The moderate CFDT trade union said it was "disappointed" by the proposed changes overall, while the hard-left Force Ouvriere union said it disagreed with many of the measures.

But crucially, from Mr Macron's perspective, neither of the unions said it would recommend its members join planned street protests this month by the Communist-backed CGT, France's biggest union.

The reform is a pivotal part of Mr Macron's domestic agenda.

He campaigned on a promise to encourage entrepreneurship in France, where the unemployment rate of 9.5 per cent is almost double that of its large European rivals.

In an interview with Le Point magazine, published on the eve of the announcement, he said the overhaul had to be "ambitious and efficient enough" to spur job creation.

The overhaul, to be implemented via executive order, will be adopted by the government this month and must then be ratified by Parliament, where the President's Republic on the Move party has a large majority.

AGENCE FRANCE-PRESSE, BLOOMBERG