Employers’ organizations and trade unions were skeptical of the reform pledges French president François Hollande made on Tuesday. The former were underwhelmed by the lack of detail while the latter feared job losses.
In a lengthy New Year’s press conference in Paris, Hollande proposed a “responsibility pact” with businesses: a €30 billion reduction in social contributions, provided companies increase hiring.
Pierre Gattaz, the head of the country’s largest employers’ union, rejected specific hiring targets, however, wondering, “What exactly is the magnitude of the structural reforms he announced? We need to have a clarification.”
Gattaz has suggested that businesses could create up to one million jobs if they are freed from excessive charges.
Hollande made no other proposals to reduce France’s high labor costs despite admitting late last year that they accounted in part for the nation’s 10.9 percent unemployment rate — the same as the European average but higher than it has been in fourteen years and more than twice the rate in neighboring Germany.
The president’s allies nevertheless hailed his new “social democratic” vision with Libération newspaper announcing that Hollande had been “set free.” But the labor unions, his Socialist Party’s traditional backers, said they were worried about public-sector job losses.
Hollande announced an increase in budget reductions from €15 to €18 billion euros for 2015, 2016 and 2017. Saving should primarily come from eliminating redundant bureaucracies.
French public-sector spending last year accounted for more than 57 percent of gross domestic product. The country’s debt is expected to reach a record 95 percent of GDP this year.
The leftist Le Monde newspaper pointed out that many of Hollande’s reform proposals were also made by his conservative predecessor, Nicolas Sarkozy. Notably, Hollande proposed to harmonize corporate taxes with Germany — where companies pay half the rate they do in France — and reduce the layers of government. In the 2012 election, Sarkozy explicitly campaigned on imitating German economic policies. Hollande’s Socialists criticized those plans at the time, claiming they would dilute the French social model.
In his speech, Hollande insisted he remained a socialist. “I have not been won over by liberalism,” he said. “To the contrary, it is the state that takes the initiative.”