France's unemployment rate fell to 10.2 per cent in the fourth quarter, providing the first quarterly decline in two years and a boost for president Francois Hollande.

The unemployment rate, measured according to the International Labour Organisation’s (ILO) criteria, was calculated under a new method that substantially modified the statistics. The third-quarter figure was revised downward to 10.3 per cent from 10.9 per cent previously, data from the INSEE statistics office showed today.

That third quarter figure was the highest unemployment rate since 2007.

"All of these indicators point to one reality: unemployment remains high, but the situation stabilised in 2013," finance minister Pierre Moscovici and labour minister Michel Sapin said in the statement.

“The battle does not end here and it will have to be expanded to bring joblessness down in our country.”

The data is a rare piece of upbeat news for Mr Hollande, who has struggled with rising unemployment since his election in May 2012 and failed last year to start reversing the trend as he had pledged.

The Socialist government, which has invested heavily in subsidised job programmes for younger and older workers, hopes that a plan to slash payroll taxes in exchange for companies increasing their hiring will bring the rate down further.

Yesterday, employers and trade unions agreed to a blueprint for implementing Hollande’s plan, which aims to cut the cost of labour as part of efforts to restore companies’ waning competitiveness.

The European Commission said it was eager to see details of Mr Hollande's payroll tax scheme, lamenting the fact that France had so far made little progress on competitiveness.

Some employers have warned that Mr Hollande’s plan may not start to have an effect on the economy until the end of this year or early 2015. (Reuters)