By Ingrid Melander
PARIS (Reuters) - France's unemployment rate jumped back in the third quarter to its 2013 peak, compounding the woes of the unpopular government struggling to pull the euro zone's second-largest economy out of stagnation.
Socialist President Francois Hollande, whose popularity has been dragged down to record lows by unemployment and earlier rounds of tax increases, said he would not run for re-election in 2017 if he failed to cut the number of jobless by then.
The jobless rate rose to 10.4 percent in the third quarter, back to its level the second quarter of 2013 - a rate last seen 16 years ago. It was the strongest rise in nearly two years and hit youths hardest, with nearly one in four out of a job.
Unemployment was 9.7 percent when Hollande came to power and 8.2 percent when predecessor Nicolas Sarkozy, now making a comeback with the aim to be the centre-right's candidate in 2017, was elected in 2007.
The worsening in the unemployment rate, after three quarters of stability, comes at a moment of growing tensions between the government and employer groups over how to create jobs.
French retailers said on Wednesday they were freezing the implementation of contracts to recruit 30,000 in subsidised jobs over three years to pressure the government to cancel a fresh 50 percent hike of the tax paid by retailers operating large commercial surfaces.
The government criticises the lack of job creation in the private sector despite plans for 40 billion euros (31.39 billion pounds) in tax cuts over the next three years, while employers say there is still too much red tape and taxation.
Economy Minister Emmanuel Macron, who next week unveils plans to open up regulated professions and ease up some labour rules, told an entrepreneurs' conference on Thursday it was time for change.
"In France we have for too long mixed up two things: we wanted to protect jobs, we wanted to protect what is there rather than protect the men and women who take risks," he said.
Accord to data compiler Markit's November survey of business activity, employment continued to fall in November in France for the 13th month in a row but at the slowest pace since August.
France's unemployment rate is calculated by the official INSEE statistics office according to International Labour Organisation methodology also used by its EU peers.
The country's monthly count of jobless claims, which uses different methods and is based on people registered at the national unemployment agency, shows fresh record highs nearly every month.
(Additional reporting by Andrew Callus; editing by Mark John)