France's labour minister bows out with unemployment high

France's labour minister said Monday that he would step down next week to become mayor of Dijon, forcing President Francois Hollande to find someone else to tackle stubbornly high unemployment.

Francois Rebsamen, 64, told Le Parisien daily that he would hand in his resignation on August 19, after the next cabinet meeting.

"I never dreamed of combining the jobs of labour minister and mayor of Dijon... I know very well that one cannot combine the two and I never envisaged that," said Rebsamen.

Later Monday, Rebsamen was formally elected mayor.

"I said I would come back and so, here I am," said Rebsamen upon his re-election.

Unemployment in France is stuck stubbornly at around 10 percent and Hollande has said he will not seek reelection in the 2017 presidential elections if he does not manage to turn the trend around.

The government is pinning its hopes for reducing unemployment on two key reforms.

One set of reforms, named after Economy Minister Emmanuel Macron, aims to open up the French economy, traditionally seen as more closed than some of its neighbours.

The second, known as the Responsibility Pact, is a deal with big business to create jobs in return for tax breaks, a drive that has sparked resentment on the left wing of Hollande's Socialist Party.

The labour market has been hobbled by sluggish growth in the eurozone's second biggest economy, with economists estimating annual growth of 1.5 percent required to bring down the jobless lines.

The first quarter of 2015, however, provided a positive surprise as the economy grew by 0.6 percent, according to the latest official figures available.

The country's central bank predicted on Monday that the third quarter would see growth of 0.3 percent -- the same as government forecasts.