Wednesday, 22 August 2012

It's time for Hollande to bite the bullet

Frankie takes a(nother) break from talking
The crushing heatwave that France is experiencing at the moment isn't the only thing which is making people grumpy. It is estimated that around 45% of the population couldn't afford a decent holiday this year and they were surely miffed to see their president get off his holiday train in Paris smiling away without a care in the world and sporting an almost indecently deep suntan after two weeks spent doing...nothing, or almost.

A president is just as entitled to a holiday as anyone else of course, but after Hollande's first '100 days' in power the French, including members of his own Parti Socialiste, are becoming increasingly uneasy at what is perceived to be a lack of presidential and governmental action on the pressing issues of the day.

These misgivings were forcefully put into words a few days ago by failed Front de Gauche parliamentary candidate Jean-Luc Mélenchon when he said that "the left is back in power after 10 years and all it can think of to do urgently is amend an existing budget and introduce a law on sexual harassment" and his verdict on the first 100 days of Hollande's reign was a stinging "100 days for almost nothing."

Despite the fact that Mélenchon had omitted to mention a few other, although equally minor, measures that the government has already introduced it's hard to argue with him and indeed few have, with government ministers being content to rally round their president with reminders that the presidency still has almost five years to run. That is true of course but it does not fully address Mélenchon's remarks.

The fact that the country is becoming increasingly worried about Hollande's performance can be imputed to his relative lack of action on his central campaign themes up to now.

Perhaps the most spectacular of those promises was to introduce a 75% tax on all earnings over one million Euros. This measure is still far from being adopted or even decided upon in preparatory discussions. Budget minister Jérome Cahuzac has already expressed his wish to see sporting personalities and showbiz stars exempted from the proposed law, and the government is now coming to terms with the fact that it will need to adjust its plans in order to avoid constitutional objections to them based on existing laws which are designed to prevent the spoliation of specific groups of people. It is probably safe to say that if ever this measure is introduced (and that is by no means certain) it will be heavily watered down.

Concerning Hollande's vow to overturn the EU fiscal pact, his efforts floundered on the rocks of Angela Merkel's resistance to them and all he got out of his corollary demand for a growth package was an insignificant measurette which implicates just a tiny percentage of European economic activity. Hollande now seems resigned to following Merkel's lead to the point where, in total contradiction to what he said before being elected, he recently announced that Greece must stick to its obligations regarding the draconian European bailout which will savage the Greek economy for years to come.

The 60,000 teaching jobs he promised? They are nowhere in sight, and, worse, the prospects for employment in general now look very grim indeed seeing as his pledge to penalise stock market-quoted companies which lay off hundreds or thousands of workers has been put back to 2013 due to what the government calls 'negotiations with the concerned parties.' A staffer at the Ministry of Work and Employment put it this way - "Negotiation is necessary in order to keep our engagements", along with the ominous caution that "the future shall tell us if these engagements can be kept." It is thus not surprising that several major companies, including Peugeot-Citroen, have announced plans to lay off thousands of workers since Hollande came to power. After all, who can stop them given the lack of concrete legislation to counter their intentions?

And what about his more global and seemingly contradictory promise to increase growth whilst simultaneously cutting France's budget deficit to 3% of GDP in one year? France's revenue authorities have already reminded him that reducing public spending means reducing salary costs in the public service, but how can he do that whilst at the same time creating the 60,000 teaching jobs plus 10,000 more in the justice system and the police? The same kind of problem awaits him in the national health service and social security.

Hollande met Prime minister Jean-Marc Ayrault yesterday in order to try and thrash out ways of slashing public spending by almost €35bn for the 2013 budget to get the deficit back down to 3%. This will not be easy because whereas the government has based its plans on a projected figure of 1.2% growth many economists and analysts predict that the French economy may not even reach 0.7%. If that happens he will be faced with the 'devil and the deep blue sea' choice of either failing to deliver on France's promise to the EU to reach 3% on time or cutting costs even more deeply.

It is of course true that rushed legislation is often botched legislation, and the socialists were quite right to criticise Nicolas Sarkozy's whirlwind flurries of legislative activity which led to several of the major laws he passed being thrown out of the Senate and back into his arms in order that he modify offending passages. Also, there are some minor new bits of legislation in view, such as a "modest" and "temporary" lowering of state tax on petrol in order to help household budgets, but measures like this are far from being enough to affect the economy in any meaningful way.

Hollande is going to have to bite the bullet sooner or later and tackle some of the major structural flaws in the French economy and labour market now that the traditional 'honeymoon period' for new presidents is over for him. France badly needs to develop a global strategy on both of these issues as well as others, and it's time Hollande got on with it.

But as things stand, François Hollande looks more like a frightened rabbit caught in the glaring headlights of the serious issues facing him than a president in active office, and that is the last thing that France or any other country needs during a period of crisis.

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