PARIS, July 26: France’s woes deepened on Thursday as news of thousands of new job losses dealt another blow to the Socialist government's hopes of reviving an ailing economy.

A day after auto giant Peugeot confirmed plans to slash its workforce in response to massive losses, telecoms equipment maker Alcatel-Lucent said it would cut 5,000 jobs worldwide by the end of 2013.

Air France presented proposals that would eliminate 5,122 positions while pharmaceuticals group Sanofi acknowledged that a planned reorganisation would lead to unspecified job losses, estimated at up to 2,000 by unions.

Elected in May on a jobs and growth ticket, President Francois Hollande is struggling to deliver amid the eurozone's financial crisis, which limits his administration's ability to stimulate activity through public spending.

Unemployment in France is running at nearly 10 per cent of the workforce.

Just under three million people were looking for work in June and a further 1.4 million were working fewer hours than they would like, according to official figures.

With the jobless total set to rise further, it is not clear what can be done to turn the economy around.

The OFCE, an influential economic forecasting body, on Thursday published a study of 11 job-creation initiatives contained in Hollande's manifesto.

The study concluded that the plan's net job creation will be largely offset by the 160,000 jobs set to be destroyed by austerity measures designed to bring France's budget deficit down to three per cent of GDP by next year and eliminate it altogether by 2017.

Hollande has branded Peugeot's plan to cut 8,000 jobs as “unacceptable”.

But analysts say the auto giant has little option but to proceed with cost cuts after posting a first-half loss of 819 million euros ($999 million).

In its first concrete attempt to intervene in the economy, the government has promised 490 million euros in subsidies to promote purchases of electric and hybrid cars in the hope of boosting the auto sector.

The scheme has come under fire from both sides of the political spectrum.—AFP