France's Budget Minister Valerie Pecresse on Tuesday said the government's reform on social VAT was expected to create up to 120,000 jobs and bolster competitiveness of local companies.

"For us, the main injustice is the unemployment that's why the president hopes that the parliament can adopt a reform which improve the competitiveness of our enterprises," Pecresse said during a weekly meeting with deputies.

"We expect this reform to create between 75,000 and 120,000 jobs because we are going to lower employment costs," she added.

The French centre-right government wants to raise by 1.6 percent in VAT rate to stand at 21.2 percent in order to "finance social welfare."

Labeled the "social VAT", the new measure, to come into effect on Oct. 1, aimed at lowering payroll taxes and increasing VAT on added value.

Trade unions and opposition parties denounced "anti-social" measure expected to weaken further the less fortunate citizens and fuel prices.