I started to go into a long essay talking about the reasons why based on the aftermath of the big youth strike a few years ago; but, after check wiki real quick, they have a great answer there.
Here it is:
Chronically high unemployment has persisted since the 1970s; a number of attempts have been made since to curb the unemployment rate.
Since the re-election of Jacques Chirac to the presidency in 2002, the successive cabinets of Jean-Pierre Raffarin and Dominique de Villepin, have tried some moderately "liberal" approach to fighting unemployment: removing or weakening workforce legislation and lowering payroll contributions in order to stimulate employment.
When he was appointed Prime Minister in May 2005, Dominique de Villepin imposed one hundred day allowance on himself to implement policies for job creation. De Villepin has said that his policies will focus on "finding jobs where there are", in other words, helping micro-enterprises (businesses with fewer than 10 employees) that are struggling to expand due to financial disincentives and helping the unemployed back into work. The Government of Dominique de Villepin has implemented several measures to promote job creation:
* Financial incentives
o Income tax cut totaling €3.5 billion.
o Encouraging unemployed young adults to work in sectors with labour shortages (i.e.: hotel industry, restaurants, etc.) by offering them a €1000 tax cut per year.
o Offering a one-off financial reward of €1000 to a long-term unemployed person who finds a job.
o Cutting taxes and Social Security contributions for businesses that hire apprentices.
o Cutting taxes and Social Security contributions for businesses that provide "face-to-face" services (i.e.: hairdressers at home, helping the elderly, childcare).
o Removing a "fine" for businesses that fire seniors.
* Creation of new employment contracts
The French Government has found it necessary to introduce new types of contracts to help those who are most likely to be themselves unemployed, especially young adults.
o The "First Employment Contract" (or CPE in French, meaning Contrat Première Embauche) concerned businesses with more than 20 employees who would need to hire young adults less than 26 years old. The two beneficiaries of this new employment contract will be employers and young adults. Employers will pay less Social Security contributions for 3 years and will be able to dismiss their employee at will for the first two years of the contract. Young adults would have benefited from the "CPE" as they will gain working experience in their chosen field. In the event of a dismissal, the employee receive government assistance and small financial compensation from their employer.
o The "New Employment Contract" (or CNE, meaning Contrat Nouvelle Embauche) concerns micro-enterprises (business with less than 20 employees). It rewards employers who want to rapidly expand the size of their business by reducing Social Security contributions, eliminating financial disincentives to growth and by reducing the amount of paperwork associated with hiring employees. The first two years of the contract are to be considered as a test period, during which the employee is exempted from unfair dismissal cover and will receive government assistance in case of dismissal. Once the two year test period has lapsed, the employee will become a permanent full-time worker
* Other measures
o Reducing administrative procedures and paperwork associated with hiring more people for micro-enterprises.
o Encouraging unemployed and unqualified young adults to work in the army to learn new skills.
Left-wing parties and unions have criticised Dominique de Villepin's policies because they believe that jobs created will be insecure and poorly-paid. Under severe protest from left-wing parties and unions, Dominique de Villepin withdrew the CPE. Then the government of Nicolas Sarkozy withdrew the CNE.