French President Jacques Chirac will address the nation today and is expected to back a youth job law that has driven millions to protest rather than drop it and risk losing his prime minister.
President Chirac is epected to back the controversial youth job law
Yesterday the Constitutional Council dismissed legal challenges to the CPE First Job Contract, handing the baton to the president.
Parliamentary sources said they expected him to sign the law which includes the CPE before explaining his decision on television at 6pm. If he signs, Mr Chirac is likely to face more protests.
If he withdraws the law, he could lose conservative Prime Minister Dominique de Villepin, a long-time ally seen as the man he would like eventually to succeed him.
Unions and students have vowed to continue their protests if the government presses on with the CPE, which aims to encourage firms to hire workers by allowing them to fire employees aged under 26 without stating a reason during a two-year trial period.
Mr Villepin, who has fiercely defended the law and made it a centrepiece of his efforts to cut youth unemployment.
Business leaders fear France's image will be damaged if protests continue and that investment and tourism could suffer, particularly because the crisis has erupted so soon after rioting by angry youths in French city suburbs late last year.
New data on Thursday showed the February unemployment rate stuck at 9.6 per cent, one of the highest rates in Europe. Joblessness among under 25-year-olds fell slightly from just below 23 per cent to 22.2 per cent.