Thousands of layoffs by major companies a contributing factor
Michel Sapin said August's unemployment data, would show a 16th consecutive monthly rise and blamed former President Nicolas Sarkozy for increasing insecurity in the jobs market.
"It's bad. It's clearly bad," Sapin told France 2 television. "But this is the result of a policy: in reality, these three million unemployed were here when we arrived in office."
Socialist Hollande won power in May with a pledge to revive the euro zone's second largest economy and tackle rising unemployment while respecting France's EU public deficit target of three per cent of gross domestic product next year.
But his plans have been waylaid by thousands of layoffs by major companies including carmaker Peugeot, drugmaker Sanofi, airline Air France-KLM and retailer Carrefour.
"We haven't seen the peak of the crisis yet from a social point of view," Mathieu Plane, economist at the French Economic Observatory (OFCE), told Reuters television. "There are almost one million more unemployed people compared with early 2008 and we can't yet say that we have reached the peak."
France's two-trillion-euro economy has posted three consecutive quarters of zero growth. Weak PMI data for September suggested it would contract in the third quarter as tax rises, unemployment and flagging exports weigh.
Confidence among consumers — the motor of the French economy — slipped in September to a seven-month low, data showed.
"Confidence is weak both with companies and, even more so, with households. It's not really surprising given the economy has fallen in recession and the private sector is facing the biggest tax hike in decades," Bruno Cavalier, analyst at Oddo securities, said in a report.
The 2013 budget, due to go before the cabinet on Sept. 28, is expected to contain more than 30 billion euros in budget savings — the harshest adjustment in decades. Economists have warned that some 20 billion euros in tax rises, split evenly between households and businesses, risk exacerbating the downturn.
The rise in long-term unemployment, particularly among the young, also risks destroying human capital and having long-term repercussions on France's potential growth rate, they say.
"Unemployment is high and it will stay high. For me there is no future," said Gilles, a 49-year-old standing in line at an employment agency in Paris. Declining to give his name, he said he had drifted between short-term job contracts and unemployment for the past 12 years.
"The only way to solve this problem would be to force companies to hire people, to hire me for example."
