By Leigh Thomas
PARIS (Reuters) - France's Socialist government sought to dispel anger at its pro-business labor reforms with a modest pay rise for public sector workers on Thursday as riot police clashed with students demonstrating against the changes for a second day in two weeks.
Eager to appease tensions with unions, the government said it would lift a six-year-old civil servant pay freeze, costing 2.4 billion euros ($2.7 billion).
Meanwhile, with thousands of students demonstrating across France, riot police fired tear gas on a marchers in Paris and three arrests were made as a demo got out of hand. Across France, students also blocked the entrances to 115 upper schools.
A government retreat on a key plank of the reform has failed to appease student organizations, which are demanding that the plans to overhaul France's rigid labor code be abandoned all together.
The government last week dropped plans to cap severance pay for dismissed workers after a protest drew tens of thousands of trade unions and students.
The reform aims to loosen France's highly codified labor relations, making them open to negotiations at individual companies in what would be a major cultural shift for the country.
The reform has become a red-flag for student organizations that usually back President Francois Hollande's Socialists, and whose support he needs if he is going to run for a second term in presidential elections little more than a year away.
The government unveiled a program earlier this week to help some disadvantaged youths get a foothold in the job market that would offer them a monthly handout of 460 euros.
On Thursday in a gesture to unions, the government said it would lift a public sector pay freeze in place since 2010 with an increase of 1.2 percent in two stages. However, it had to improve its offer in talks with unions after they rejected a first proposal as too little.
($1 = 0.8842 euros)
(Reporting by Leigh Thomas; Editing by Andrew Callus)