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Economic Logic vs Left-wing Ideology Stirs France

Published on , , Paris, Twitter: @tourbg
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“The idea that France could go forward and the French could live better, working less, is absolutely false”. A short sentence with a huge meaning. Not only because it is said by the French minister of economy at a meeting of the largest employers’ organisation, Medef, but also because Emmanuel Macron is a minister of economy in a left-wing government. The same left-wing that is tooting the horn of its own reform “of the 35 hours”, lowering weekly working hours from 37-39 to 35, proposed by Martine Aubry in 1998 and voted in in the 2000. Few are aware that source of the idea is Dominique Strauss-Kahn. 

A reform, towards which the former investment banker has already repeatedly voiced a negative opinion. The same reform caused a fight, back in 2011, between Martine Aubry (then the First Secretary of the Socialist Party) and the current Prime Minister Manuel Valls, who dared to propose the removal of the 35 hours. Emmanuel Macron, who clarified in a special declaration for Agence France-Presse that he did not mean the 35 hours, chose the most (in)convenient moment to stir-up the hornets’ nest. While the minister of economy was giving a speech in front of the state’s largest employers, the ruling Socialist party was having its annual gathering in La Rochelle before the start of the autumn political season. Macron’s absence from this gathering was subject to criticism by various members of the left. His speech, in which everybody recognised the criticism towards the left’s emblematic reform, enraged the left wing of the party that even asked for his resignation. 

“Emmanuel Macron insulted all of the left’s history, from Jean Jaurès and Léon Blum, through  François Mitterrand, to Martine Aubry”, said Member of Parliament Yann Galut. “After such speeches we understand why he prefers Medef’s applause to the company of socialists here, at La Rochelle.”  Parliament speaker Claude Bartolone said that this is a “false good idea” and added that “Macron has talent, but the French demand peace and quiet, so everyone should be mindful of their statements”. The right hand of Martine Aubry, François Lamy, qualified the statement as “a childish provocation”

Emmanuel Macron is a repeat offender in scandalising the left. The former investment banker of Rothschild repeated in front of business leaders what he always believed and said, without any cushioning: “The left is wrong in believing that politics is done against the business, or at least without it, that it is sufficient to vote in laws and enforce restrictions for things to change. That it is not necessary to know the world of business for you to regulate it. That the French could live better by working less.” 

The minister has one goal only – to rid the left of “the chains of the past”, as he says himself. The favourite of the president speaks his mind. In the spring, he advised the socialists not to place the 35 hours on a pedestal; he announced it was time to update labour law that is in the last century in essence and in the one before last in spirit; he criticised the left for forgetting “the true value of labour”; asked for reduction in government spending and forecasted that if this did not happen France would turn from a developed country into a developing one. His statements turned First Secretary of the Socialists Jean-Christophe Cambadélis into his biggest enemy.

Labour unions did not waste time in following suit with the bombardment. According to Philippe Martinez of the General Confederation of Labour (CGT), one of the five biggest labour unions, “this is not a provocation, it is part of this government’s policy. This year Medef applauded Macron, same as it did Valls last year. I love the business, I love the bosses ... this is the policy that we fight against daily.” According to Véronique Descacq, “the idea that France could walk out of the crisis by more work is stupid and primitive”.

The left-wing's right-wing minister

His statement, as was to be expected, got applauded by the rightists. With a certain dose of irony Gérald Darmanin, spokesman of the Nicolas Sarkozy’s campaign for return to the presidency, suggested ceding his parliamentary representative’s constituency to him, Pierre-Yves Bournazel, national advisor for the Union for a Popular Movement (UMP), voiced his regret that Macron is “on his own against the dogmatic old Socialist party”. Sébastien Huyghe, spokesman of the Republicans said that he did not understand how Macron claims to be left, while most of the things he says coincide with the ideas of the right.  

They say of Manuel Valls that he is the best choice for prime minister president François Hollande could have made. The two of them have liked each other since the Socialists’ primaries in 2011 when Manuel Valls received 5% of the vote before backing Hollande. Thanks to Valls’s presence Hollande was not positioned to the rightest and seemed to be a consensus candidate, remembers France 2 journalist David Pujadas. Exactly one year ago one of the most prominent representatives of the radical left, Arnaud Montebourg, left the government and his place was taken by investment banker Macron. Macron is to Valls what Valls is to Hollande, all political journalists agree. “You take Valls and Macron, place Sarkozy next to them and the latter seems left-wing to you”, says TF1 journalist Claire Chazal. 

A minister outside the norm

Who can we compare Emmanuel Macron to? Tony Blair? Emmanuel Macron talks about business, initiative, success, modernisation of the left’s ideas. He is determined in battling the taboos of the old left that only knows how to redistribute. Or with Nicolas Sarkozy? “France cannot go forward by working less” looks a bit like “work more to make more” of 2007. “I did not realise that Nicolas Sarkozy was back in government”, says Christian Paul of Le Monde. Others compare him to Alain Juppé of the 80’s. Le Point in its turn defines him as the new Pompidou. To François Hollande Macron is a double-edged sword. Jacques Delors, Dominique Strauss-Kahn, Pierre Bérégovoy ... it is not the first occasion when a Minister of Economy in a left-wing government plays the role of a “liberal fuse”. However, if Macron’s public image hinders the unification of all the left behind Hollande, it is only his actions that could lead to the results that Hollande needs to win a second term.  

In just a year, in Bercy, Emmanuel Macron has managed to incur the wrath of almost all professional organisations. Lawyers, judges, notaries, bailiffs, in December 2014 over 50 000 of them protested against the “Macron” law that aims to ease the judicial process in its trade part. Pharmacists jumped against market liberalisation, dentists – against the deeper transparency in price-formation asked for by the minister, not to mention he was the only one to support Uber’s activities and advocated for modernisation of legislation. The name of Emmanuel Macron circulated during the week as a favourite for the minister of labour office that was vacated by François Rebsamen’s resignation in mid-August. “The only thing missing in the employers’ associations’ expectations for the new minister is the name of Macron”, Arthure Berdah of Le Figaro, believes. 

According to Solenn de Royer of Le Figaro, however, if Macron has won the applause of the employers, the right, the liberal and social-democratic wings of the Socialist party with his latest statements he has seriously compromised his chances for becoming minister of labour. “This would mean declaring war on the labour unions”, believe most of Hollande’s advisors. According to most forecasts, state secretary in charge of transport Alain Vidalies and parliamentary group leader Bruno Le Roux are favourites for the post. Besides, it is highly unlikely Valls would allow the ambitious Macron to become a sort of “second Prime Minister” after François Hollande announced that lowering unemployment was a number one priority by the end of his term. The PM’s reaction to Macron’s statement speaks for itself: “The real issues at the moment are unemployment and economic growth”.

The cold shower of zero growth

After a growth of 0.7% during the first quarter of the year, France surprisingly scored zero growth in the second, according to INSEE’s preliminary forecasts. Even the worst of forecasts around the Eurozone crisis showed a drop of growth down to 0.3%. Minister of Finance Michel Sapin claims that zero growth in the second quarter poses no threat to the forecast of a 1% growth for the year but household consumption for the period is also slowing down (+0.1% as opposed to +0.9% during the first three months of the year), which is a sign that French economy is unable to sustain its growth rate. According to Michel Sapin, however, the growth in export and the expansion in investments show that the government’s economic policy is bearing fruit. 

Economist Gérard Thoris connects zero growth to the deflation that France is in: “If prices are in a tendency to drop no one is eager to buy, which is confirmed by the growth figures for both household consumption and business investment”. According to him, even bigger export is simply due to a cyclical growth of sales in certain sectors like the automotive industry. According to Jacques Delpla, also an economist, those numbers are “a cold shower” even if the forecast of 1% on a yearly basis is fulfilled. “Good numbers in the first quarter came from outside factors – the oil prices and currency exchange rates - and whoever expected this to bring a long-term effect knows nothing about economics. This is simply a one-off effect and now we go back to the bad news. With an addition – a drop in construction – a sector that held on so far, despite the crisis, which adds a bad perspective for François Hollande.” 

The growth in investments of a mere 0.2% is also worrying, according to the two economists. “In the context of cheap oil and favourable currency rates it should have been at least 5%”, says Delpla. Pierre Sabatier of the Institute for financial research PrimeView, however, reminds that unlike other EU countries like Germany, Italy, Spain and Great Britain, the French economy is far more static. This is the reason its drop was smaller during the crisis (-2.9% against -5.6% for Germany or -5.5% for Italy). By the same logic the French growth after the recession is slower. French economy reports a higher GDP than the one prior to the 2008/2009 crisis (+8.7%), which is weaker compared to the USA and Germany (+16% and +20% respectively), but is better than Italy and Spain, who are noting a drop of 1% and 3%. According to him, from now on any growth exceeding 1% should be considered a good result. 

To economist Laurent Herblay, though, the huge difference between the two numbers (0.7% and 0%) actually comes from “overstocking” during the first quarter, which was eliminated in the second. This shows that the French economy is stable. He feels, however, that society suffers of “strategic blindness” for statistics do not account for different factors, like this one, thus creating such good (+0.7%) and bad (zero growth) news that actually do not exist. Arthure Berdah of Le Figaro reminds, that, despite the bad news that are coming from statistics, François Hollande and the government are showing constant optimism, giving as an example the famous saying of the president “growth is here”, regardless of this growth not being backed by statistical data. Same goes for the “unemployment curve” that Hollande has been “reversing” since 2012. Marc Landrais of the Agency for Salary Guarantee gives another cause for optimism. According to him, the situation is improving, which is clearly seen in the drop of over 4% of the amount and number of cases in which the agency pays salaries in bankrupted companies or companies in trouble. Moreover, a 3% growth in recovered amounts is noted. 

Fighting unemployment and the new minister of labour

 François Rebsamen is leaving the government to become a mayor of Dijon, leaving 400 000 more unemployed compared to the month he took up the post. “A significant and sustainable decline in the number of unemployed” will be the task of whoever takes up his place. This was the condition that François Hollande set before himself in order to run for a second term. According to Bertrand Martinot, social adviser to president Sarkozy, the frequent change of ministers of labour (a third minister will step in office for the last three years) does not allow a quality solution of important problems. “A minister of labour could be efficient only after the third year in office; the new minister will obviously not have as long, so that he could improve the situation. Besides, unemployment is not controlled by him alone.” 

Martinot is of the opinion that part of the reforms in the labour market should rather be entrusted to the Ministry of Economy. “Unemployment levels are record high today and there will surely be a decline, but there is no way it will be sustainable without reforms in labour legislation, which is outdated and does not correspond to current economic realities. This, however, requires full consent between the ministers of Economy and labour and full support by the Prime Minister and President. Something that has been missing so far. As a result Rebsamen is leaving the government, remembered as the minister of unemployment”.

The new minister of labour will receive unemployment as the only dossier with three bad records in it – 3.8 million unemployed, according to statistics, 6.4 million recorded in the Labour Offices in the three categories, and 44.1% of job-seekers recorded for over a year. He will need to beware of hasty promises. Michel Sapin, who took the post with the coming of François Hollande in the Palais de l'Élysée, promised to “reverse the unemployment curve”, Rebsamen’s goal was to lower the number of unemployed to fewer than 3 million. Both promises are high benchmarks for the new minister of labour, for they are unachievable even with a record high economic growth like the one at the end of the 90’s. 

France - Europe's bad student

Unemployment has risen in 32 of the 36 months of Hollande’s term. The future labour minister, however, has someone to learn from. Neighbouring countries liberalised their labour legislation, something France has been unable to do ever since the term of Prime Minister Édouard Balladur. All thanks to labour unions. After he came to power in 2014 Matteo Renzi simplified Italian labour legislation, concerning layoffs of workers and employees in American fashion. Renzi managed to remove the infamous Article 18 of the Labour Code, which turned labour unions into supreme authority and made layoffs impossible ever since 1970. Something Silvio Berlusconi attempted but failed to do in 2002. This article was blocking the labour market, discouraged recruitment, and stopped foreign investment.

Italy introduced a new type of contract, which is something between a temporary and a permanent contract, called a “growing protection contract”. Owing to this measure many companies gradually established as permanent part of their temporary employees. According to Italian statistics, the effect of the new measures is the creation of 100 000 new jobs in May and 180 000 in June. Renzi is still facing the problem of high youth unemployment (42.7% in June). Spain has created 400 000 new jobs in the second quarter and over half a million since the beginning of the year. The country has one of the highest unemployment rates in Europe, but the effect of the new measures is already seen (22.4% versus 27% a year ago). Mariano Rajoy’s government liberalised the conditions for hiring workers and, combined with an economic growth of 3%, is bearing fruit. The problem is that some of these new jobs are temporary and nobody knows if a long-term effect will be achieved. Spain, however, forecasts unemployment to be brought down to 10% in 2018. 

After the 2008 crisis Great Britain introduced flexible contracts, which led to an unemployment rate of 5.6% in June. In June of 2014, 4.6 million Britons were self-employed, which represents 15% of the active population. There is a large number of companies that are making use of the so called “zero hours contract”, which does not guarantee any minimum work hours or wage. A little over 700 000 are the Brits on such contracts. Germany is fighting unemployment with “Kurzarbeit”. In brief, any company experiencing economic difficulties can lower their employees’ work hours for a period of maximum six months and the state partly reimburses the lower wages. In the peak of recession, around 1.1 million employees were in this situation. Today unemployment in Germany is 2.71 million (6.2%), the lowest since the unification of East and West Germany in 1990. 

On Sunday, when adjourning the meeting of the Socialist party in La Rochelle, Manuel Valls announced he was planning a large reform, “in depth”, of labour legislation and specified that the 35-hour debate was closed and assured that “economic growth is here”. “What I am interested in is not the past, it is the future”, said Valls to the audience's applause. He announced the state’s intentions to leave more freedom to employers and employees in the relations between them. “We can protect workers without enforcing mindless restrictions to business. This is social democracy”. Valls reassured the business as well by discarding part of the left-wing’s ideas for new corporate tax. “We have to stop with the tax zigzag if we want our companies to be competitive. Economic players need stability, clarity, predictability. This is how you build trust and achieve economic growth”, finished the Prime Minister. 

Hot autumn for Hollande

Three months before the regional and 18 before the presidential elections the new political season is looking difficult for François Hollande. The president has to visit every corner of the country to show himself as being close to the Frenchmen and limit the losses in the regional elections, while at the same time staying on the international scene. The Minister of Labour’s resignation set Hollande facing a fait accompli and an unanticipated change in government at a moment when the socialists’ partners – the Greens and the radical left – are torn by inside disagreements and the liberal and the far-left wing of the party are in a state of almost open war. Arguments have already started over the budget that needs to be submitted by the end of September. He also has important visits abroad – Great Britain, USA, China, Turkey, Morocco, Korea, European Council in Brussels, EU-Africa summit in Malta, as well as a UN Assembly. 

And if the start of the new political season looks busy, after the “catastrophe” of last year (the exit of Montebourg and Filippetti from the government, the Valérie Trierweiler book, and the Thévenoud affair) Hollande and Valls can expect a relatively calm autumn. The Montebourg comeback, turbulence between the Greens, and Mélenchon’s furious criticism, however, remind Hollande that before he faces the right wing and Marine le Pen he will have serious trouble within the left.

Turmoil between partners and Varoufakis

A year after leaving the government with a scandal, the leader of the party’s radical wing Arnaud Montebourg is returning to the political stage to prepare at an early stage his candidacy for the presidential nomination. And he is not alone. Besides Aurélie Filippetti, who has now “joined him in life”, Montebourg was accompanied by ... Yanis Varoufakis at the Bourg-en-Bresse Rose festival. “Celebrities? What celebrities, those are former ministers, expelled from the corresponding governments”, says MP Christophe Sirugue. “The party’s leadership does not like people who make them think”, comes the answer from Montebourg’s close circle before firing away new criticism towards the government and Brussels. 

The split within the Greens is also no cause for optimism for the socialists and their return to government is not on the agenda, regardless of such suggestions. “The left-wing’s left wing”, as French journalists have dubbed Jean-Luc Mélenchon’s Left Front is also torn by controversy between communists and anti-mondialists. And the dream of Jean-Christophe Cambadélis for uniting a large front of left-wing parties behind François Hollande is looking harder and harder to fulfil. Almost like Hollande’s personal bet with unemployment. And what if Le Point prove correct once more and Macron is the new Pompidou (the only French president to whom the presidential elections are the first elections ever)? Perhaps the time has really come in Old Europe for “left-right” politicians like Macron, Valls, and Renzi, who don’t pay homage to taboos, without completely exiting the political coordinate system, like SYRIZA or PODEMOS.

Translated by Stanimir Stoev

*Alexabder Nikolov is a blogger living in France

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