France’s Hollande Bypasses Parliament, Enacts Reforms

France’s president enacts economic reforms by executive order, bypassing his own Socialist Party.

French president François Hollande delivers a speech outside the Elysée Palace in Paris, July 24, 2014
French president François Hollande delivers a speech outside the Elysée Palace in Paris, July 24, 2014 (Elysée)

French president François Hollande bypassed his own Socialist Party lawmakers on Tuesday by signing into law liberal economic reforms that are meant to pull the country out of economic malaise and avoid a confrontation with the rest of the European Union.

Manuel Valls, Hollande’s reformist prime minister, admitted there might not be a majority in favor of the measures but said the government would not risk their rejection. “Nothing will make us move back,” he said.

By executive order allowed under France’s constitution, Hollande rammed through a package of reforms put together by Emmanuel Macron, the economy minister. They can only be stopped if the whole government is ousted in a confidence vote.

Opposition conservatives, led by former president Nicolas Sarkozy, said they would call such a vote of confidence in response to the emergency action. Hollande is betting his Socialist Party rebels will fall back in line to avoid snap elections they would almost certainly lose.

The government hailed Hollande’s action as prove that he is serious about liberalizing the French economy after being urged to do so for years by his European partners. A rejection of the package would have raised pressure on the European Commission to fine France for once again missing its deficit target this year.

Late last year, the commission gave France a pass when it said it would fail to reduce its shortfall to under 3 percent of economic output, the deficit ceiling for countries in the euro area. Rather than enacting additional spending cuts or tax increases, Valls promised the government would implement structural reforms to improve French competitiveness.

“We need to unblock the economy, liberate energies, lift constraints,” the prime minister said at the time. Recognizing resistance from the left wing of the ruling Socialist Party, he added, “Sometimes you have to choose risk over rent, immobilization, conservatism. The French are ready, often more than their leaders.”

The reforms were originally proposed by Macron, a former banker who is mistrusted by leftwingers, in October. They will allow businesses to operate on Sundays, shorten labor arbitration procedures and open up protected professions such as pharmacists and notaries.

The changes come on top of tax cuts worth €40 billion by 2017 that should help companies reduce labor costs.

Labor costs in France, at €34 per hour, far exceed the European average of €23.

Martine Aubry, who was one of Hollande’s opponents in the 2011 Socialist Party primary, criticized the plan to allow shops to open twelve Sundays per year, up from five, as “social regression.” Far-left parties were expected to oppose the bill as well.

Only a few conservatives broke ranks with Sarkozy, who started a political comeback last year, to express support for policy changes their party has advocated since 2007.

With unemployment over 10 percent and the French economy projected to expand just .8 percent by the Organization for Economic Cooperation and Development this year, many economists say the reforms are long overdue.

A recent poll suggested that more than 60 percent of the French agree.

Hollande’s inability to get the measures through parliament nevertheless underlined his consistent unpopularity after even his previously record-low approval ratings had ticked up a little in the wake of last month’s Islamist terror attacks in Paris.

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