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  • 2019/04/25
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Springtime challenges

Emmanuel Macron has quietly said that there are many urgent files piling up in the ministers’ offices and he wants to work quickly to launch Act II of his five-year term.

Indeed, in a caustic editorial in the weekly Le Point entitled “Free Macron”, Pierre-Antoine Delhommais argues that the President has a “unique and unexpected opportunity to do away with the “together” policy.

 

To prove his point, Delhommais insists that it is time to finally address the significant deficiencies that the French economy is suffering from, “to blow up the 35-hour week handcuffs, once and for all, push back unequivocally and make the painful change in the starting retirement age to 65 years or drastically cut public spending by reducing the number of functionnaires and delegating their jobs to the private sector; the Government is still responsible for those jobs, but it performs them very badly”.

 

That is what is said, written and published, without the ability to quantify the social consequences of such decisions which are deemed necessary.

 

Then, we learn after reading yet another report, this one written by LREM Deputy Joël Giraud, spokesperson for the Finance Commission, that households and companies will benefit overall from decreases in mandatory withholdings in the range of 32 billion euros before the end of the five-year term. Households will be the primary beneficiaries.

In this public information report published Tuesday, Deputy Giraud provides several details about the direction of public finances for the rest of Macron’s five-year term, through 2022, by reconsidering the 2019-2022 stability programme recently announced by the government. The areas addressed in the parliamentary report are numerous, including taxation, public spending and management of the government’s finances. But the overall tone is decidedly optimistic, since the basic finding espoused by the presidential majority seems encouraging. For Giraud, France is experiencing a “quick recovery” of its public finances, with a lower deficit and debt, respectively, of 2.5% and 98.4% of GDP in 2018. The majority is therefore maintaining its objectives targeting a public deficit of 1.2% of GDP in 2022 and debt of 96.8% of GDP for the same period, in line with expectations in Brussels. A budgetary strategy to which Giraud gives his “unconditional” support.

 

But at the same time, a study published by Le Figaro warns of the depletion, if not disappearance, of jobs traditionally held by the middle class, which underscores the polarisation of the French jobs market. Le Figaro elaborates further: “Since the beginning of the banking and financial crisis of 2008-2011, the middle class has seen their future prospects dwindle. That is the conclusion of a study by the Centre for economic research and its applications (CEPREMAP)  published last Friday. For its authors, the French labour market has been permanently impacted by the boom in new technologies since the middle of the 1990s, leading to a two-fold shift: the decline in jobs traditionally held by the middle class (intermediary professions, office workers, etc.) on the one hand, and the increase in upper and lower class jobs on the other. This long-term trend has been exacerbated by the shock that hit the global economy between 2008 and 2011. “The crisis compounded the deep structural forces of globalisation”, explains the two economists who started the study. According to them, this difficult period  drove companies “to adapt quickly” to new realities so as “to reduce the costs”, cutting first and foremost wherever needs were lower. Intermediary jobs are more affected by automation than others; “replacing routine tasks affects, above all, the workers in the middle of the wage distribution”, they write.

 

While the economy is showing signs of slowing down, companies continue to hire on permanent contracts, as the daily Les Echos explains.

“Interim figures published on Wednesday by the central agency of social security bodies (Acoss)suggest a little more than one million declarations of recruitment under this type of contract in the first quarter, excluding temp workers. This figure is up 2.4% compared to the prior three months. The main drivers have been companies with fewer than 20 employees. A sign, perhaps, that the disruptions related to the yellow-vest movement are behind us”. And finally, this morning, Guillaume Maujean of Les Echos revisits the success of the Livret A, the historically popular, untaxed French savings account. “It was thought to be dead and buried, but the preferred investment for French people has never deserved its name more”. Springtime is so full of surprises.

Christian Moguérou

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