Heath minister Marisol Touraine says social security deficit will hit 11.7 billion euros this year instead of originally forecast of 9.8 billion.
Despite abstention of 33 MPs from ruling Socialist Party, government cuts payroll taxes as third major union boycotts social conference.
Spelling out measures which angered sections of his own party, new prime minister Manuel Valls said: 'We cannot live beyond our means.'
France and Germany echo UK calls to restrict welfare payments for EU migrants ahead of a predicted influx of Romanian and Bulgarian workers.
President Nicolas Sarkozy has clearly decided to make the fight against social benefits fraud, described by one of his ministers as "a cancer of French society", one of the main themes of his 2012 re-election campaign. While that will not officially begin until early next year, this week saw a carefully coordinated blitz against the increasingly stigmatised welfare dependent, and which announces the colour of the presidential election debate ahead. Marine Turchi reports.