Macron’s reforming zeal will be a test of France’s appetite for change

‘The left and the right don’t know how to respond to President Macron’s reform agenda,” said a former senior trade union official. “What he’s doing doesn’t fit with the way we think about politics. It’s not like the third-way politics championed by Tony Blair.

“It is based on empowerment of the individual – which threatens the left – and on the deployment of the state to invest and drive through reforms – which upsets the right. Neither has found a language or an alternative agenda with which to confront him.”

Tomorrow, France’s prime minister, Édouard Philippe, will meet trade union leaders in an attempt to defuse a row that is seen as an important test of France’s appetite for change.

Plans to strip train drivers of their many privileges, including retirement at 52, were backed by France’s lower house of parliament earlier this year, which set MPs on a collision course with one of the most powerful blocs of workers in Europe. Strikes began last month and are set to run until July in a bid to force a U-turn.

President Emmanuel Macron, 40, has said he will pursue the reforms “to the end”, and polls say most French voters are behind him. An Ifop poll last week found that only 41% of French people consider the train drivers’ industrial action justified, a drop on a survey the previous week. Other polls have suggested the same, but some with a closer margin for and against.

France’s GDP growth fell below the OECD average in 2015, and is significantly below both the UK and Germany

US$ thousands per capita

Germany

UK

OECD average

France

32

36

40

44

$48

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Guardian Graphic | Source: OECD

Yet there is anger across the spectrum about the speed at which changes are being implemented, and the implications for European Union elections next year and local elections in 2020, now that Marine Le Pen’s Front National has become a mainstream protest vehicle.

The shake-up of pension arrangements for state rail operator SNCF affects almost 200,000 employees. According to Macron’s manifesto, that is just the start. He has plans to fold 40-odd employer and state pension schemes into one, potentially asking millions to give up benefits and privileges negotiated over many decades.

Alain Duhamel, a political commentator, said Macron had “taken a great risk by starting with a whole series of reforms which weren’t popular even before this social turnaround”. He told RTL radio: “What’s at stake is the metamorphosis of SNCF, a national company that is the most symbolic in France.” The president, he added, had to avoid a “coagulation of conflicts”. This “coagulation” has been a recurrent fear among French governments since the riots of May 1968.

Georgina Wright of the Chatham House thinktank said Macron feared his powers might evaporate quickly were the coalition he formed from his fledgling party and mainly right-of-centre rivals to break apart. “His majority in the lower house is just 23. So he has pushed hard while the majority is still in place. He also needs to deliver on some of his pledges and see results quickly. For instance he wants to cut 50,000 public sector jobs in his first term, but critics have been quick to point out that only 1,600 have gone so far, and many of those were contracts, not full-time posts.”

One example of the way Macron has confused opponents is the legislation passed in January that allows citizens the “right to make a mistake” when dealing with the state without being sanctioned. Only one error is allowed and it must be made “in good faith”, but the intent is to push back against bureaucratic control.

Businesses and individuals have long complained about the unresponsive French state. “It’s impossible to get a state worker on the phone, and when you do, they just say non,” an unnamed official said last week.

This droit à l’erreur is viewed as a gimmick by some, but to Macron it is the cornerstone of a wider attempt to foster a “trusting society” and simplify bureaucracy. Government departments are seen as sclerotic institutions that don’t talk to each other and are staffed by blinkered civil servants who, unlike their British counterparts, rarely change departments.

This may smack in some ways of Blairism, and there are similarities in Macron’s urge to support entrepreneurs with tax cuts and a more flexible labour market. He also wants to open up higher education and push some of France’s moribund universities into international rankings dominated by US and UK institutions.

Chloë Morin, director of the Opinion Observatory at left-leaning thinktank the Jean Jaurès Foundation, said opinion polls showed Macron’s support wavering in some income groups: “The more people earn, the higher the support for Macron. This shows a polarisation of French society in terms of opinion.”

Morin argues that Macron is in danger of being seen as “unfair”, not so much because of his attack on SNCF workers, but more in his wealth tax and pension reforms. “There’s a sense that it benefits exclusively the rich, but also criticism of the method, a sense that he is inflexible, rigid and doesn’t listen. We are hearing this more and more: that he doesn’t listen but is set on imposing his model.”

Unemployment among France’s 15- to 24-year-olds is more than twice that of the national average

Unemployment rates, percent

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5

10

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Guardian Graphic | Source: OECD

The SNCF dispute has been contagious, sparking industrial action at Air France and among refuse collectors, hospital workers and teachers. Only 8% of France’s workforce is unionised, but the unions – especially the Conféderation Générale du Travail (CGT) – punch above their weight.

What’s worse for the president is that the left likens him not to Tony Blair, but to Margaret Thatcher, a despised figure in France.

Alexis Corbière, of leftist party La France Insoumise (France Unbowed), said the government’s response to the SNCF crisis had a Thatcherite feel: “He’s a bit Margaret Macron … there’s a certain contempt for union organisations and the train drivers.” He said the striking drivers were “heroes fighting for a public service”.

Former Socialist president François Hollande accused Macron of hitting the poor while helping the rich. “This deepening inequality is a major problem … My governments reduced inequalities; this one is increasing them.”

Even some who support the SNCF reforms are critical of Macron. Laurence Sailliet of the centre-right Les Républicains said: “The method is bad: there’s a lot of arrogance from the president … and from members of the government who keep playing the big guns and haven’t realised that the unions can be a blocking force.”

Speaking to journalists before a meeting with the prime minister tomorrow, Laurent Berger, head of France’s other large union, the CFDT, said: “I hope he will listen to us. The solution to the conflict is first of all that the trains begin rolling normally again but also that the drivers don’t feel humiliated. We don’t need people showing their muscle, but people who will discuss the real issues.”

The moderate CFDT has overtaken the leftist CGT in recent years to become France’s biggest union by member numbers. For Macron, the sense that old-style radicalism – represented by the CGT, with its tyre burning and secondary picketing – is dying, is hugely helpful.

The former union official summed it up: “French people are ready to make sacrifices if they think their children’s future will be improved. As long as unemployment keeps falling, job opportunities increase and the extra funds for education and training make a difference, he has a good chance of deflecting claims that he’s a president for the rich.”

Five things Macron wants to change

Taxation

Macron’s reputation as a president for the rich was burnished by the cut in wealth tax pushed through last year and effective from January. A tax introduced in the 1980s on savings, investment and property was limited by Macron to just property. Like its predecessor, the tax has a sliding scale from 0.5% annual surcharge on real estate worth €1.3m to 1.5% on properties worth more than £10m. Revenues to the government are expected to fall from €5bn to €2bn. But the plan is also about mimicking the UK by consolidating several charges on savings and investments into one capital gains tax at 30% (the UK’s non-property CGT is 20%).

Copying the trend across the developed world, corporation tax, currently 15% on profits of €38,120, 28% up to €75,000 and 33.3% on above €75,000, will by 2020 apply to all firms at a rate of 28% before falling to 25% in 2022 (the UK is due to cut the current 19% rate to 18% in 2020).

Union power

Nothing in Macron’s plans comes near the anti-union legislation brought in by Margaret Thatcher during the 1980s. But big unions such as the CGT dislike new rules allowing workers in small and medium-sized enterprises (SMEs) to negotiate their own agreements. The government says 96% of SMEs do not have union reps. Firms with 11-50 staff can strike a deal with a non-unionised rep. Firms with fewer than 20 employees can organise a referendum, though changes to terms and conditions will need a two-thirds majority.

To end the lottery of compensation claims for unfair dismissal, Macron will set a mandatory sliding scale for damages, from three months’ salary after two years of service to 20 months’ salary after 30 years. Appeals must be lodged within a year rather than two.

Business regulations

When a company hires its 50th employee, it faces a series of obligations, including the nomination of workers’ representatives to a works council and a health and safety committee. Under proposed changes, the three groups will be folded into a single social and economic committee, though separate health and safety committees will remain in high-risk sectors.

Short-term job contracts

A large underbelly of France’s workforce is on short-term contracts, which are routinely renewed. This helps employers avoid the protections offered by long-term contracts, which include a 35-hour working week. Macron wants to move away from this to industry-based rules set by representatives from each sector. The government hopes that incentives to work beyond 35 hours, which are much used already, and reformed dismissal terms will make the system more flexible.

Public finances

Macron needs to finance his reforms and has signalled to Brussels that he may bust budget spending limits in the short term. A version of austerity-lite has shaved a few euros from student benefits and capped rises in some welfare schemes. But even a modest proposal such as cutting 150,000 civil servants from the 5.3 million total has been met with resistance.