France's ruling conservatives are set to offer unions a compromise aimed at ending a bitter row over a youth labour law that has sparked calls for Prime Minister Dominique de Villepin to step down.
Jacky Dintinger, secretary-general of the CFTC trade union
Some senior conservatives have mooted suspending the "easy hire, easy fire" contract for up to six months to give time to find an alternative.
But unions, bolstered by mass street protests, are still insisting it be withdrawn outright.
"If we don't get what we are seeking, we'll start making preparations for further mobilisation on the scale that we saw on Tuesday," Jacky Dintinger, secretary-general of the CFTC trade union, said of nationwide strikes and protests which brought at least a million onto the streets.
Mr Dintinger said possible action could be decided at a meeting of France's main unions and student groups set for Monday.
Mediators from President Jacques Chirac's ruling Union for a Popular Movement (UMP) were due to call a news conference later today to announce a compromise offer after three days of talks with trade unions, students and employer groups.
Mr Villepin rejected widespread speculation on Thursday that he was considering resigning. But the fate of the long-time Chirac ally is intimately linked with that of the First Job Contract (CPE) he fast-tracked through parliament.
UMP secretary-general Pierre Mehaignerie last night suggested a possible face-saving compromise under which the CPE - which only went on the statute books last Sunday - would not be repealed but formally suspended for three to six months.
Mr Mehaignerie is seen as close to Interior Minister Nicolas Sarkozy, a potential rival to Mr Villepin to lead the right into next year's presidential elections.
As UMP chief, Mr Sarkozy would be expected to play a key role in subsequent negotiations over an alternative and could then emerge as a hero, boosting his presidential ambitions at Mr Villepin's expense.
In its original form, the CPE contract gives employers the right to summarily lay off workers under 26 within a two-year trial period without giving any reason.
Backers say the contract will help cut youth unemployment of 22 per cent by bypassing existing French labour law that makes it hard to sack anyone with a fixed contract - often cited by firms as a disincentive for hiring in the first place. Critics say the contract will add to job insecurity and will be abused by unscrupulous employers.