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France: Emmanuel Macron’s War on Welfare

Emmanuel Macron’s War on Welfare Emmanuel Macron France is in chaos. For the last five years, the land of wine, cheese and chateaux ha...

Emmanuel Macron’s War on Welfare
Emmanuel Macron

France is in chaos. For the last five years, the land of wine, cheese and chateaux has dominated headlines for all the wrong reasons: a series of terror attacks, the yearlong mobilization by the gilets jaunes, and now the longest transport strike in over two decades that crippled Île-de-France (greater Paris region) amid growing social discontent and police brutality. Scores of anti-Semitic attacks are forcing the Jewish community to flee France, raising questions about the government of the 42-year-old Emmanuel Macron, who was elected in 2017 as the youngest French president.

The crises Macron has presided over since his election have come in the middle of Brexit and the imminent departure of Angela Merkel from the German leadership, raising deep concerns for the French welfare state and the so-called French model.

A former investment banker and economy minister, Emmanuel Macron took over from François Hollande, who had become deeply unpopular in the last few months of his presidency. Though Hollande had battled the extreme right to legalize same-sex marriage and cautiously pursued labor and pension reforms, the neoliberal order didn’t find him bold enough for its taste. Pushed to the wall by a conservative press that painted him as inefficient, Hollande suffered a precipitous decline in approval ratings. The subsequent terrorist attacks in Paris in 2015 and a year later in Nice meant his days in the Élysée Palace were numbered.

Macron’s victory over the leader of the extreme-right National Rally (then the National Front), Marine Le Pen, in 2017, was seen by many voters as picking the lesser evil between fascism and neoliberalism. Fashioning himself as a centrist, Macron promised to reform France and — true to his words — launched the first wave of reforms soon after taking power.

As a result, hundreds of mayors were forced to resign in an administrative shake-up. But it were the proposed changes in French labor code which aimed to liberalize the standard employment relationships that provoked the first controversy of Macron’s presidency. The 2017 reforms introduced French-style flexicurity and increased the competitiveness of businesses by giving them greater flexibility to hire and fire their staff.

The Reform Champion?
As Macron and his prime minister, Edouard Philippe, took successive steps to dismantle the French welfare state, they both underestimated and undermined the resistance facing them. Macron’s tax reforms have been said to under-tax the rich elites. In its exhaustive study, a Paris-based think tank, OFCE, found that the biggest losers of these tax exemptions are the poorest 15% of French households who will see their standard of living reduced.

In September 2017, France notoriously reformed the impôt de solidarité sur la fortune — the solidarity tax on wealth — to exclude investments benefiting its wealthy class. The 2018 budget introduced a 30% flat-rate levy on capital revenues that benefit the very rich. But it was the fuel tax that triggered a nationwide people’s movement in November 2018, capturing the economic and social anxiety among the lower middle class. The movement, which came to be known as the “yellow vests,” after the fluorescent jackets motorists carry in their vehicles, became the epitome of frustration and resentment among the French working class forced to live on the margins of working poverty. French geographer Christophe Guilluy has termed this growing divide and downgrading of the middle classes as “la France périphérique” — peripheral France.

Today, the gilets jaunes movement continues its resistance after more than a year of waving the French flag and singing “La Marseillaise.” The gilets jaunes protests have also faced an extreme use of force as the police resorted to targeting citizens with rubber bullets. Macron’s own former bodyguard was dismissed after facing criminal charges for assault and impersonating a police officer following an attack at a May Day demonstration. Subsequently, Macron launched a “Grand Debate” in town halls across the country, culminating with a pledge to lower income tax in Europe’s most-taxed country.

And yet, just as gilets jaunes began to lose steam, Macron wasted no time in relaunching the second wave of reforms with the pension bill. The pension system is a major component of the French social contract. Macron’s reform is an extension of Nicolas Sarkozy’s 2010 reform. The controversial bill reflects Macron’s neoliberal disdain for social protections and limits the role of social dialogue in economic governance.

The pension reforms replace France’s 42 pension schemes into a single “universal” points-based system. The government aims to roll out the new system by the end of this year. The French expenditure on old-age pensions was equivalent to 12.2% of GDP in 2017. Though the number is higher than the EU average, it has ensured that only 8.4% of those 65 years or over are at risk of poverty in France compared to almost 16% across the EU and over 18% in Germany. The proposed reforms not only cut benefits for millions but will also bring down the standard of living for French pensioners.

The resistance to pension reforms has brought together the entire working population. It has seen students, lawyers, firefighters, airline pilots, doctors and self-employed professionals join hands together as France witnessed its longest transport strike since 1986. Despite the shutdown and massive protests, Macron has declared no intention to back down. His arrogance has full support from the global neoliberal media network that has ensured minimal coverage, at best, of the protests.

Surviving Macron
Many in the media have compared the ongoing protests to the UK’s miners’ strike of 1984–85, drawing parallels between Macron’s strategy and that of Margaret Thatcher. However, such a comparison is embedded in a limited understanding. Macron’s approach is more akin to that of Germany’s Chancellor Gerhard Schröder, who launched the Hartz reforms during 2003–05. While Germany was able to drastically reduce its unemployment rate, the reforms created one of the largest low-wage sectors in the EU, an achievement that France would do well to avoid.

The Hartz reforms were based on the recommendations by former Volkswagen personnel boss Peter Hartz. It has been alleged that US asset manager Blackrock is influencing the French government over the ongoing retirement system reform to impose privately-funded pension schemes in France. Blackrock, with close to $7 trillion in funds, has substantially expanded its presence in Paris under Macron. The recent awarding of France’s highest honor to a Blackrock boss further underscores the intimate relationship between Macron and the financial leviathan. Macron’s hasty reform, based on “flawed financial projections,” creates a class-based pension system that will push working-class pensioners toward the risk of poverty.

Halfway through his five-year tenure, Macron has been successful in his endeavor to dismantle the French model as we know it. In terms of social protections, France is bracketed as a conservative welfare state. The neoliberal cure for the “statist” French model and underlying social protections is justified as the only recourse out of degrading public finance and a high unemployment rate. This reaffirms the French fascination with the “successful” German-style reforms to sync social progress with competitiveness.

In days to come, Macron is expected to take steps targeting the upper middle classes as a priority. These include abolishing the housing tax (to benefit around 80% of households) and reduction in income tax that Macron announced in response to the feeling of “fiscal injustice.”

Macron seems to be stuck in a bubble and is using the camouflage of reform to disrupt the French welfare state. The retrenchment of the welfare state and the introduction of “new flexibility” is crucial to his scheme. Crushing transport trade unions and humiliating social movements remain his prime agenda. The already weakened trade unions may never recover from this latest blow. Macron’s final aim is to convert the French unemployed into the working poor who can feed the growing demand for cheap labor in the services sector dominated by part-time work. The agenda of liberalization has been justified under the garb of “much-needed reform.”

This push toward economic uncertainty and economic decline is good news for the French extreme right led by Marine Le Pen. We have witnessed how the American Rust Belt emerged as Donald Trump’s cheerleader. We have seen how fear of immigration fueled Brexit in the UK. Le Pen has already announced her plans to challenge Macron in 2022 as France continues to experience a sharp rise in inequality and slower growth. The share of wealth held by the richest 1% has been increasing continuously since the mid-1980s. French citizens with migrant backgrounds remain at the margins of their country’s labor market.

As of now, President Macron seems confident of reelection as long as the far right remains his main opposition. But Macron’s own policies will have a long-term negative impact on both French society and economy.

No Alternative Yet
France and its unique economic model that achieved innovation and well-being of its public alongside an excellent health-care system and economic egalitarianism must be safeguarded. France needs reform, but not the kind that breeds economic precarity. France will do better by cutting government wastefulness and the abuse of state resources by its elite. The issue of widespread discrimination in hiring minorities is a major barrier that needs to be fixed.

Macron is today a disconnected leader of a divided and discontented republic. His economic governance is aggravating social injustice. It is unlikely that he will slow down his war on core elements of French welfare. A president living in a luxurious palace and preaching welfare system as “wasteful” while sitting behind a golden desk is something that calls for reform. What France needs is real action to change the lives of its worst off. Over 600 homeless people officially died in France in 2018. The main casualty of Macron’s war on welfare will be social justice.

France needs a credible alternative to Emmanuel Macron in the 2022 elections. Euroskeptics like Marine Le Pen can’t play that role. The upcoming municipal elections in March will serve as an opportunity for the French Left, including the French Communist Party and the Socialists, to reclaim their lost political significance and bring the focus back to social democracy. They must project themselves as guardians of the French model and the republic for which it stands.

The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy.


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