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In Grim French North, Worker Unrest Looks To Last

The stinging letter infuriated France's political class and even drew a rebuke from the director of Goodyear France, who insisted that the accusations against the workers he's trying to lay off were "unfair."

"It is logical that companies make money. It is their first goal. But at some point, they also must divide the wealth fairly," said Mickael Wamen, a union leader at the factory who organized Tuesday's protest.

Figures from the Organization for Economic Co-operation and Development show France has one of the highest rates of productivity - measured as economic output per hour worked - in Europe. In fact, it is close to that of the U.S.

But that productivity rate in France also costs more because of higher taxes for companies. As a result, analysts and politicians say France, the continent's second-largest economy after Germany, is rapidly losing its competitiveness.

For weeks now, French government officials have hinted, warned and then finally outright acknowledged that the country was going to miss its EU-mandated deficit targets, that unemployment was certain to rise even beyond the current 10.7 percent, and that drastic spending cuts were going to hit every city and town for years to come.

Hollande was blunt on Saturday as he warned both European authorities and the French that things would get worse before they improved.

"2013 will be marked by more unemployment," he said.

Stephen Lewis, chief economist for Monument Securities, said Hollande's options were dwindling fast and was relying on the EU's leniency on deficit targets. The EU expects France's budget deficit to be 4.6 percent of annual GDP in 2012, well above the bloc's 3 percent target.

"His short-term option is to try to persuade the EU authorities to give him more leeway. Then he'll be able to continue with his budgetary policies and not impose more austerity on what already is an austere situation," Lewis said. "The moment that the EU acknowledges France has a problem is the moment when we have a major euro crisis."

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