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  • 2018/09/12
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Back to work, without a great leap forward

The post-summer return to work is proving tricky for President Emmanuel Macron and his government. An article in Le Figaro Economie analyses why economic growth is weaker than expected and slower than the government had hoped for. The reason is that the expansion has stalled somewhat, thus complicating the budget allocation process and slowing the pace of reform.

“The choices made by the government for the current year have accentuated the slowdown by hobbling consumption, our main growth engine,” writes the Figaro journalist. “After picking up in late 2017 to reach 2.3% by year’s end, the growth rate has slowed sharply in 2018. France’s gross domestic product grew by just 0.2% in both the first and second quarters, dashing hopes of a speedy recovery in the public finances.

The finance ministry has scrutinised the reasons for the drop-off and concluded that two sets of exogenous factors are to blame. “The first set, cited by the teams working for Finance Minister Bruno Le Maire and Budget Minister Gérald Darmanin, comprises international factors: the oil price, which has risen more than 7 percentage points relative to forecasts, and the decline in global demand for French goods and services. The second set of factors are domestic, notably the end-of-year holiday period, strikes and labour protests […].

In short, it seems that a series of unfortunate events have temporarily derailed efforts to get the country back on its feet. And, implicitly, the administration is not responsible for the situation”. So, despite a radiant summer, the skies are now overcast. Admittedly, however, not everyone is in the same boat. Executive and managerial wages have increased handsomely, despite the economic slowdown. The year-on-year growth rate was 2.7% in first-half 2018 according to a survey published Monday by Expectra, a Randstad subsidiary.

The survey shows that although household purchasing power took a bit of a beating in the first half, mainly because of government reforms and resurgent inflation, executive and managerial compensation held up fairly well. It rose 2.7% in the first six months of 2018 according to Expectra’s findings, based on real-income data from more than 77,000 payslips.

Le Figaro’s article goes a step further: “Not only have [these remuneration packages] increased faster than in prior periods; they have registered the biggest increase for six years, says Expectra.” Although this is the eighth consecutive annual rise, the first-half 2018 increase is fully in line with the recovery that began in 2015 with an increase of 1.2%, followed by 1.7% in 2016 and 2017.

This followed on from several years of much smaller rises, none of which topped 1%. According to Expectra CEO Christophe Bougeard, the 2018 salary bump is due to the “sustained vitality of the French economy in the previous year”. Mr Bougeard also points to “a clear trend among companies to favour individual pay rises”, as well as a “talent war”, especially in the digital sector.

Specifically, four professions in the survey sample saw wage gains in excess of 8%: web marketing project managers (9.5%), research managers (8.6%), construction engineers (8.5%) and maintenance engineers (8.1%). Such is the eternal paradox of France, in all its complexity but also its search for firmer growth and incremental wealth. In other words, the incessant dream of a great leap forward.

Christian Moguérou

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