French President Jacques Chirac has announced that the new youth employment law that sparked weeks of sometimes violent protests will be scrapped.
He said it would be replaced by other measures to tackle youth unemployment.
Millions of students and union members have taken to the streets over the last month in protest against the law, which made it easier to fire young workers.
Union and student leaders said it was a "great victory" but it is not clear if protests set for Tuesday are still on.
The law introduced a new work contract, known as the First Employment Contract or CPE for under-26s.
It was to allow a two-year trial period, during which employers could end a contract without explanation.
France has just opened the door to civil unrest with every unpopular law or edict from the government. When you reward bad behavior, you can expect more of it.
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