Friday, 16 August 2019

The future of Renault

France more or less comes to a halt in August, particularly over the 15th of August, which is a public holiday. This year is true to form, with August 15th falling on a Thursday and most people intending to take a summer holiday adding a long weekend to their entitlement. Like every year, the rolling news networks are clutching at straws to keep themselves going, covering mainly, in the absence of major international developments, the weather, traffic jams on the Mediterranean bound motorways and the all-too-frequent forest fires.

It is also a time therefore for discreet discussions about business mergers and acquisitions as the media spotlight is dimmed and the rumour mill running on empty. One imagines that this year in particular, intense discussions are ongoing between Renault, Fiat Chrysler Automobiles and Nissan, a month or so after the withdrawal of a merger proposal to Renault by Fiat and almost a year since the arrest of the erstwhile boss of both Renault  and Nissan, Carlos Ghosn, in Tokyo on charges of financial improprieties as CEO of Nissan, his ensuing dismissal by both Nissan and Renault and the serious deterioration of relations between the two companies.

That the global car market is suffering from overcapacity and has become fiercely competitive is not in doubt. One only has to listen to any French radio station or watch any TV network for more than ten minutes to hear at least two advertisements for some French or foreign car. Excess capacity has been exercising the minds of industry executives for at least 30 years. Sorting through some old papers the other day, I came across a glossy brochure prepared by the Renault communications department in October 1993 announcing details of the agreed merger between Renault and Volvo, which had been involved in an alliance for some years. “Why is the announced merger between Renault and Volvo necessary when, as has often been asserted, the alliance was working very well?” is the first question put to the boss of Renault at the time, Louis Schweitzer, on page 1 of the brochure. “Renault and Volvo are intending to merge because the alliance has been a success and that give us the guarantee that the merger will also be a success” is the answer. Had a merger between Renault and Nissan gone ahead, as Carlos Ghosn undoubtedly wanted but that Nissan was fiercely resisting, one could imagine almost identical words being written today. But they won’t be because the merger didn’t happen (or at least hasn’t happened yet!). Nor did the merger between Renault and Volvo. The underlying reason was the same in both cases: the presence, or as some would have it, the meddling of the French state.

Why exactly the French state finds it not just desirable but seemingly essential to be a major shareholder of a car company is for many observers outside France a puzzle and even an aberration. Interestingly, Emmanuel Macron, for all his purported credentials as an economic liberal has in this case adopted much the same attitude as his predecessors, espousing the long French tradition, initiated by Colbert under Louis XIV, of promoting and keeping a firm grip by the state on parts of French industry. As finance minister under François Hollande, Macron came up with millions of Euros of taxpayers’ money to buy enough additional Renault shares to force its AGM to adopt a resolution on double voting rights, thus ensuring effective state control of the company. It is now known that Carlos Ghosn was very much against this move and that Nissan was furious about it. It had long complained that Renault, with its 43% stake, whereas it only holds 15% of Renault, was the predominant shareholder in the alliance while Nissan contributed most of its profits! Ironically, this was the result of Carlos Ghosn’s 20-year stewardship of the alliance, starting in 1999, when Louis Schweitzer sent him to revive the almost bankrupt company in which he had just purchased that 43% stake. Similar to Renault and Volvo in 1993, Renault and Nissan were ripe for a merger after 20 years of a largely successful alliance. The surprise arrest of Ghosn in Tokyo last November seems to have been the last spanner that Nissan could throw in the works of a merger that would have formed a global company under the effective control of the French government. The Volvo scenario revisited 25 years later, but with much larger stakes.

None of these developments of course have done anything to reduce overcapacity in the global car market. Carlos Ghosn had thought that he was running a global car company with the clout to become a, if not the, major force in the global market. Regardless of whether the charges against him are proven or not, he has done a superb job of turning around both companies and, with the addition of Mitsubishi, was on the cusp of achieving an ambition in tune with his exceptional talent - and exceptionally large ego!

The main conclusion I draw from this sad story is that the French administrative elite, unlike its business elite, is still under the influence of Colbert almost three centuries later and has not yet come to terms with some of the realities of globalised markets. Renault will have to engage in a merger soon as it cannot survive alone, given the huge investments that carmakers in general will have to make in zero-emissions and self-driving vehicles.  A merger with the other French champion, Peugeot, run by a former associate of Ghosn at Renault, Carlos Tavares, seems out of the question in view of the companies’ very different cultures and the EU competition issues it would raise. A merger with the smaller and struggling Fiat would bring Chrysler into the picture and with the addition of Nissan/Mitsubishi could form the leading car company in the world. The French government must soon decide if it can bear to loosen its grip on a national champion in order to replace it with a global champion with a French core. As negotiations proceed quietly before the end of the summer holidays, it does not have much time to make up its mind.

Monday, 29 July 2019

Back to work......for some

The French Prime Minister’s policy statement to parliament some weeks ago was billed as the beginning of Act 2 of the Macron Presidency, hopefully heralding a return to the path of reform from which Emmanuel Macron was temporarily ejected by the five month-long protests of the “gilets jaunes” movement. The FT titled the next day: French Prime Minister seeks to get jobless back to work faster”, seeing the reform of unemployment benefits as the main takeaway from the speech. And indeed, a few days later, both the Prime Minister and his Minister of Labour, Muriel Pénicaud, officially presented the reform in detail.

Before delving into that detail, it’s worth pointing out that this is the second reform that the government has decided to remove from the time-honoured tradition of joint union employer/employee agreements, under which both side of industry are supposed to negotiate an agreement about how to manage vocational training or unemployment benefits or top-up pensions. When Macron became President, he made it clear that these three systems had to be profoundly shaken up, not only to make them more effective but also to reduce their respective deficits, which the state budget, in other words the taxpayer, ultimately ends up funding. Neither this injunction nor the fact that employee and employer unions draw some of their revenue from running these systems seems to have concentrated their minds. The first scheme to be taken over by the state was vocational training, now redesigned to be more responsive to the real needs of both industry and trainees. It is too early to tell whether a scheme run by public authorities will produce better results than one run by the “social partners” and if so, how long it will take to show. But initial indications are positive: it has been reported that new apprenticeship contracts for 2018-2019 for example have reached record levels even before the end of the school year.

The unemployment benefits scheme has followed suit. After months of negotiations from which no agreement emerged, the government has stepped in once again to take control. The detailed reform presented a few days ago is the result of its thinking. It is hardly a coincidence  in this context that Muriel Pénicaud herself, before coming to the attention of Emmanuel Macron and joining the French government as Minister of Labour, was for many years the top human resources manager of a large French company and has certainly a greater understanding of the corporate sector than most career politicians and their civil servants.

While most media, French and foreign, have focused mainly on the proposed curtailment of benefits for high-earning executives, an understandable if somewhat illogical approach given that it is executive staff and their employers who contribute most to the system,  the understated thrust of the announced changes seems to be to sharpen the incentives for the unemployed to find a new job rather than stay on benefits. As I wrote in a previous post (“Unemployment: really going down?” May 25th, 2019) a lot of the unemployed are able to claim unemployment benefit after working for only 4 months in the previous 28 and entitled to claim full benefits again after only 150 hours of employment. In addition, due to the way in which benefits are currently calculated, they can end up “earning” more in unemployment benefits than they did in salary! The government has therefore plumped for an overhaul of a system it considers, in comparison with those in many comparable countries, overgenerous.  Under the new system to be introduced at the beginning of next year, employees will have to have worked for 6 months out of the previous 24 to be able to claim benefits and will not be able to claim further benefits before they have been employed for at least 900 hours. Care will also be taken to ensure that henceforth, anyone receiving benefits will never receive more than in employment. As far as employers are concerned, they will be encouraged to offer fewer short and very short-term labour contracts by being penalised if they continue doing so but rewarded if they are prepared to make longer-term commitments to their employees.

The overall package is of course not perfect. The government has not for example given too much publicity to the fact that the “medico-social sector” is not covered by the new bonus /malus system. Hardly surprising when one considers that most hospitals and a lot of social care institutions are in the public sector and the government is hypocritically but understandably reluctant to prescribe its own remedies to itself! This being said, the new system has drawn protests in equal measure from both trade unions and employers, an indication that it probably represents a reasonable and common-sense compromise.  The state employment agency, “Pole Emploi”, is also to be given a greater role in helping the unemployed find work, a worthy idea but probably of little effect given that the agency now spends far more time managing benefits than filling job vacancies, advertisements for which have largely shifted to dedicated websites and small ads. The revamped system will be no miracle cure for unemployment either; experts consider that it may bring up to 250 000 unemployed back into work, under 10% of the almost 3 million people registered as unemployed, a clear indication that, contrary to what many people think and some politicians publicly state,  indolence is not the main cause of unemployment. But these provisos aside, the reform does seem a sensible step towards sharpening the incentives to work while imposing no extra hardship on those affected and supporting them more in their quest.  Emmanuel Macron, whose consistent and single-minded policy has always been to change the work culture in France by profoundly reforming the labour market would certainly warm to the FT’s headline that this further step along that road is indeed designed to get more people back into work faster.  

Sunday, 16 June 2019

The responsible use of language

“Giving things the wrong name makes the world a poorer place” (“mal nommer les choses c’est ajouter au malheur du monde”) wrote the French writer and philosopher, Albert Camus. Conference interpreters and translators, professions of which I have been a proud member for over forty years, go to more trouble than most to find the right words as the quality of their work depends on it. Perhaps that is why I am particularly sensitive to the way that language can - and often is - twisted to meet particular ends.

Contrary to conference interpreters and translators, politicians and trade unionists can of course be excused for exaggerating – it’s their stock in trade, a time-honoured way of oversimplifying complex messages to make an impact on their voters or members. This tendency did not start with populist politicians, but their rise has certainly accentuated it. The erstwhile leader of the French communist party, Georges Marchais, for instance, was known for his pithy and colourful expressions and particularly his habit of blaming everything that was wrong with France on capitalist barons (“le grand capital”) regardless of the fact that his party, as part of France’s immediate post-war government, had helped lay the foundations of its very generous welfare state. Today’s communist party and its soul mates in the CGT union lose no opportunity to denounce “the deliberate destruction of the (French) social model (“la casse de notre modèle social”) after the recent loosening of labour market regulations, the end to a particularly protective labour contract for railway workers or the probable future reduction of unemployment benefits.  As if universal health care, family allowances and 5 weeks paid holiday were about to be ditched at the instigation of globalized capitalist lobbies (“les lobbys mondialisés”) advocating a policy of unbridled liberalism (“le libéralisme sauvage”). At the other end of the political spectrum, the supposed consequences of “being submerged by immigrants” (“ la submersion migratoire de la France” ) are regularly denounced by the parties of the extreme right  for whom l’identité française, seen only as white and Christian, is under threat (“menace sur l’identité chrétienne (de la France)”) and held up as an ideal that cannot possibly, against all historical evidence, accommodate people who have different histories, religions or skin colours.

Most of us, who hear such phrases every day, quickly shrug them off as crass exaggeration and tend to consider them as unimportant as everyone can see where these speakers are coming from. Maybe. But repeated over and over again, do they not gradually erode the possibility of engaging in balanced discourse and civilized debate? And encourage people who should know better to actually indulge in unbalanced discourse and appear to believe what they are saying?

Take for example the case of the novelist Eric Vuillard, the author of an interesting novel entitled “The Order of the Day (“L’Ordre du Jour”) about the willing complicity of German industrial barons in Hitler’s rise to power, that won the prestigious Prix Goncourt in 2017. During a recent conversation at the Hay-on-Wye literary festival, he is reported* to have described the French government’s response to the gilets jaunes protest movement as “authoritarian” and asserted that restrictions on press freedom in France were in preparation. It is unclear whether he was really trying to suggest sinister parallels between today’s France and Hitler’s Germany. The article suggests that he was.  Be that as it may, the idea that the six week “Great Debate “, together with subsidies, tax breaks and extra allowances worth €11bn. can be considered as an “authoritarian” response is little more than a gross distortion of the facts.  Even if he was referring to the legitimate controversy over the tactics of the French riot  police during the gilets jaunes’ regular Saturday demonstrations, the inference that the police behaved with deliberate  brutality akin to that  of Hitler’s brown-shirted thugs is entirely unwarranted and unworthy of an intellectual figure, especially someone talking to a foreign audience that is probably not familiar with what actually happened and has only seen dramatic TV pictures and YouTube videos.

A really scandalous distortion of the facts however must be laid at the door of the gilets jaunes themselves. In a demonstration against police tactics last weekend, they called themselves “the mutilated as an example to others” (“les mutilés pour l’exemple”) This time, the reference is crystal clear: during the First World War a  number of French footsoldiers were executed by firing squads made up of their comrades  and on the orders of their superiors “as an example to others” (“ les fusillés pour l’exemple”), largely on trumped-up charges of desertion or cowardice in the face of the enemy. Only recently, almost 100 years after the events, have their reputations been restored by the official recognition that the vast majority of the “fusillés pour l’exemple” were terrified and traumatised young men who, at the critical moment, were unable to bring themselves to face almost certain death when ordered by officers to charge enemy trenches.

The gilets jaunes who formed the association of mutilés pour l’exemple comprise a few who were indeed unfortunate enough to lose a hand or an eye as a result of being hit by a police grenade. While there seems little justification for using such dangerous weapons (the most dangerous have since been banned for policing demonstrations) and a number of policemen are under investigation for being too trigger happy, considering themselves “mutilated as an example to others” seems a totally unacceptable abuse of language. Were the demonstrators ordered to demonstrate and, in the course of those demonstrations, to throw stones and rocks at the police and set fire to or overturn their vehicles? Of course not!  Were the police under orders to fire their grenades indiscriminately with the aim of injuring and maiming as many demonstrators as possible? At a time when the 30-year anniversary of the Tienanmen massacre is a stark reminder of what really happens when security forces open fire on a crowd with live bullets, precisely as an example to others, the suggestion is preposterous. Were any demonstrators actually killed as a result of police action? No. The only fatalities that did occur during the gilets jaunes protests were caused by traffic accidents for which the protestors themselves were indirectly responsible during their occupation of roundabouts. And although losing a hand or an eye is certainly a serious injury, the small number of those who were injured in this way received prompt and effective medical attention.

By assimilating their fate to that of the “fusillés pour l’exemple”, these gilets jaunes have simply thrown discredit on their movement and clearly shown that shrill exaggeration can only obscure a balanced assessment of what caused their movement in the first place.

One can only hope that both the novelist and the shadowy gilets jaunes leaders will think twice before identifying their words or deeds again with far more dramatic and far-reaching historical events. Legitimate criticism or protest does not make the world a poorer place; self-serving and self-pitying justification for it certainly does.

*In an article in the Financial Times of May 30, 2019: “Lessons for the present from French historical fiction” by Frederick Studemann.

Thursday, 6 June 2019

Servants of the public ?

One the more surprising and at the same time revealing moments of the crisis of the “gilets jaunes” was a scene broadcast on the evening news some time ago in which a pensioner thrust his pay slip into the hands of Emmanuel Macron on a walkabout and demanded to know why he was receiving €100 less from one month to the next. In full view of the attendant cameras, Macron considered the piece of paper, explained some of the deductions but after poring over the slip for a minute or so, ended up admitting that he couldn’t answer the question!

There are a number of conclusions that can be drawn from this scene and none reflect well on the enormous French administrative machine and the army of civil servants who run it: the first is that pay slips, like so many other official papers, letters and circulars either from, or in the form required by, the French administration are frequently not easy to understand. The number of lines in a pay slip, detailing all the deductions described in acronyms like CSG, CASA, CRDS etc. is probably pretty incomprehensible to most employees, even those who have completed high school - notwithstanding that two of them disappeared during 2018. Little wonder that most people only look at the bottom line which is their take-home pay and are not fully aware that such deductions from their gross salary correspond to their contributions to health care, unemployment, occupational accident insurance and pension.  It is true of course that their employers’ contributions to these same services are much higher.

More generally, the big and largely successful effort made some years ago in the British civil service to write “plain English” and make official letters and circulars more easily comprehensible even to the least educated members of society has not yet been seriously considered, let alone copied in France. Perhaps now that 80% of any age group pass their school leaving baccalauréat at 18, it is generally considered that they are well armed to understand opaque civil service prose and abstruse acronyms! There was, it is true, under the Hollande presidency, an attempt to simplify many administrative procedures. A Simplification Committee was even set up. It doesn’t seem to have simplified very much and, more importantly perhaps, its remit didn’t run to actually simplifying the language in which such procedures are written.

Another conclusion that can be drawn from the scene mentioned above is that public services are not always easily accessible and that many civil servants are not doing their job properly even when they are. One imagines the pensioner referred to above trying to call an official from the pension service to ask about the series of deductions that he clearly does not understand. The chances are that after being asked repeatedly, by a suave and usually female recorded voice to the accompaniment of a repetitive and irritating jingle, to press 1, 2 or 3 on his keypad, he will end up with a recorded message saying either that his call will be answered in no more than 10 minutes or that nobody is available to answer it and that he should please call back later. Should he be lucky enough to live close enough to an administrative office and try to consult a real live official, he can expect to wait for quite some time before being called forward - the whole process usually taking the best part of half a day. But there are fewer and fewer such offices. In my home town of over 20 thousand people in the Paris area, the social security office has been closed down and moved 20 kilometers down the road. If you live in a rural area you would be lucky to find an office within 50 kilometers of your home. As to the state-run pension service, it has been “streamlined” over the years and only one national telephone number is now available for queries.

Little wonder that anger and frustration have built up among people who do not understand the constant changes to legislation and regulations that can have a big impact on their pensions or other benefits. The lack of understanding and access to another human being who can give comprehensible and reassuring explanations breeds suspicion if not downright hostility. 

The French system is surely not alone in these failings. Even if the French have coined the adjective “kafkaien”, derived from Franz Kafka’s stories, to describe the cruel absurdity, seeming indifference and real opacity of an administrative system,  it is little comfort to a flummoxed French pensioner to be told that it can be a lot worse in other countries, particularly the U.K, as anybody who has seen Ken Loach’s film “I, Daniel Blake” will know.

To be fair though, there are timid attempts in France to bring the administration closer to the people, especially those who are scattered throughout mainland France's countless rural areas. A network of public service hubs (Maisons de Services au Public) is being set up, complete with computers, internet connections and dedicated phone lines, where people can go and either call or connect to a number of public services. On TV the other night, a pensioner was seen asking for help from the sole employee at the desk of one of these newly opened facilities. He refused to help out in a rather surly manner, saying that if he left his desk, he would be unable to answer other queries. As is often the case, the idea is sound, but the initial implementation is poor and the front-line staff apparently unprepared and probably untrained. The latest official figure puts the number of these hubs at 1281 but many are still a long way from where some people live.

Interestingly, in the nationwide consultation in connection with the “Great Debate”, two questions asked whether respondents would like to see itinerant public services or multi-purpose civil servants who could answer a series of administrative questions on anything from health care to unemployment benefits and pensions. It has also been reported recently that following the loosening of criteria for income related tax benefits (crédit d’impôt), 340 extra officials have been recruited to help claimants fill out their application forms at local family allowance offices.

This is surely a positive move but behind it lies the whole question of a root and branch reform of the very organisation of public services in France that would make them more accessible to people, regardless of their claim or query or where they live. Ideally, answers to such calls and queries, providing incomplete and sometimes incomprehensible answers should give way to a pro-active attitude where front-line public servants would provide accurate and straightforward answers to queries and provide information about rights and how to claim them. This would surely do a lot to relieve legitimate frustration and hostility. The timid attempts so far show that there is at least an awareness in high places of the need to act in this way but it is very early days yet, and it will take time as well as long and difficult negotiations with the powerful civil service unions to break many entrenched habits and turn an army of mouse clickers, often barely visible behind their large screens, into people who can be truly called servants of the public !

Saturday, 25 May 2019

Unemployment: really going down ?

The recent announcement that the unemployment rate in mainland France has fallen to its lowest level in over ten years has led to much comment and analysis. The government is clearly delighted that such good news should break just a few days before the European elections and sees it as a vindication of its policies at a time when its list, led by the decidedly uninspiring Nathalie Loiseau, is running neck and neck with that of the Rassemblement National led by a young protégé of Marine le Pen. Others point out that, even if unemployment has fallen consistently since the election of Emmanuel Macron, a rate of 8.7% is still among the highest in the EU and compares unfavourably with that of Germany and the UK, although slightly better than that of Spain and Italy. They also highlight the paradox that there are 2.8 million people enrolled in the national employment agency at a time when so many jobs are on offer and that so many businesses are unable to find the employees they are looking for.

In a way, both are right. Or at least not entirely wrong. But whatever credit the government can take for the steady fall in unemployment over the past two years, the underlying situation is more worrying than it would like to make out.

The government can indeed take some credit for the downward trend in unemployment: Emmanuel Macron has consistently maintained that putting more people into work is the key to putting more money in people’s pockets, reducing social inequality and, at the same time, alleviating pressure on public spending. True to this vision, the government has made the labour market more flexible and given a boost to apprenticeships and vocational training since it came to power, as this blog has often reported. Even the emergency measures to contain the revolt of the gilets jaunes are primarily designed to favour people in work or actively seeking it: a reduction in welfare charges on overtime, an increase in employment related tax benefits and bigger handouts to single parent families. Taken together, all these measures will surely put more downward pressure on the unemployment rate as more vacancies are filled.

This being said, it is hard to see the French unemployment rate falling to German or UK levels without big changes to the benefits system and, more significantly, to the culture of work in France. In the euphemistic expression of an expert on the radio the other day, the French social model “is more protective than most”. Meaning that benefits of all kinds and particularly unemployment benefits are more generous, and more easily granted, than in most other countries. A restaurant owner I know in the Morbihan (a coastal département in Brittany) told me recently that he was having great difficulty finding a waiter for the winter. A number of those who showed some interest in the position made it clear that they were better off working for just a summer season and drawing unemployment benefits during the winter…but if the restaurant owner were willing to pay them cash under the table, they may be more interested! The CEO of a small construction and renovation firm in the same département told me that he had enough orders for another two permanent employees if only he could find them, but he couldn’t  In his experience, it was not just that potential applicants lacked the skills, it was simply that they found the work too demanding and the hours too long (despite the fairly strict observance of the 35-hour working week!). An article in the local newspaper reported in the same week that the regional employers’ organisation was desperate to fill at least 500 vacancies for delivery drivers and countless other unskilled or semi-skilled jobs.

What appears to be happening is that many people looking for work are only prepared to envisage clean, fairly undemanding and safe jobs, preferably not starting at 7 or 8 in the morning!  Unlike in Germany or the UK, a lot of the French reject the idea of zero-hours contracts or mini-jobs of the kind that have driven unemployment levels in those countries to record lows. Or putting a different gloss on it, why should they bother to accept such irregular jobs when a few months in a regular job is usually sufficient to be able to draw unemployment benefits for a few more? It is true of course that most job creation today is in service industries, that frequently offer irregular and unsocial hours, little stability and minimum benefits, if any. French unions and left-wing politicians regularly deride these kinds of jobs and the result is that they are alien to the work culture in France, where any job that does not guarantee a full working week, full benefits and at least the minimum wage is widely considered inferior and therefore undesirable. And especially after the gilets jaunes revolt, no French government is about to legislate to introduce them, nor any political party to champion them.  And yet, large numbers of young French people still emigrate temporarily to London for instance where they can easily find work, although it is invariably low-paid, unstable and they have to share cramped accommodation with three or four other people. Even if learning English is one of their motivations for working in London, it is not unreasonable to assume that they would prefer to find such jobs in France, where they would also benefit from a higher minimum wage and mandatory benefits. But that is precisely one of the reasons that stops employers from taking on unskilled and temporary staff. If wages were lower, hours more flexible and benefits optional, they would be willing to take on more of them. But in the present highly regulated labour market, they are not. As President François Mitterrand once famously said, “we have tried absolutely everything to reduce unemployment.”  Letting a lightly regulated labour market find its own equilibrium was clearly never an option. Nor has it ever been seriously considered in a country where social cohesion is more than just a slogan, and which does more than any other in the EU to reduce income inequality through social transfers.

If my reading of Macron’s economic strategy is correct, he is nevertheless moving ahead not only to promote greater employability through his reforms on training but also, slowly, cautiously and the gilets jaunes notwithstanding, on changing the incentives and disincentives to employment. A further test of his determination will come soon with the government’s proposed legislation to reform unemployment benefits and above all, pension benefits. On unemployment benefits, the government has not yet shown its full hand, but targeted leaks talk of executives’ benefits being reduced. This would not exactly be a seismic shift given the fact that unemployment among executives is about a third of the national figure. Nor would it be entirely fair, as executives, and their employers, are by far and away the biggest contributors to the unemployment insurance scheme in the first place. Are bigger changes in the incentives and disincentives to employment in the offing? Barring last-minute surprises, it doesn’t appear likely. The same seems to be true for the other major reform that Macron promised during his election campaign, that of pensions. Discussions have been going on for months between the unions and a government appointed mediator to knock into shape the bold promise that the 44 individual pension schemes, all of which of course are very much under the thumb of the state, would be merged into one, putting an end to the complexity of the current system and more importantly to the particularly generous pension scheme for public sector workers in general and utilities workers in particular. It could reasonably be argued, after all, that the French work shorter hours and take longer holidays than in most other countries and that they should therefore be required to work longer before drawing a pension, especially as life expectancy is now a lot greater than it was when the current arrangements were introduced after the war and that President Mitterrand made even more generous in 1981 by reducing, at a stroke, the retirement age from 65 to 60. Again, according to leaks to the media, the government’s strategy is to shift to a new system in which the “official” retirement age would remain at its current level of 62, but that all employees would in reality have to contribute longer to earn a decent pension. Once again, the government appears to want to act by stealth rather than coming clean and telling people the unvarnished truth.  So, even if these two reforms might still herald a big shift in the incentives and disincentives to employment, the signs at the moment are that, like so many reforms in France, they will be too timorous and half-baked to make a big difference.

But without such shifts in the system, and, more importantly, in the culture of work they might gradually bring about, don’t expect to see the French unemployment rate fall much lower than 8.7% and certainly nowhere near the levels of Germany and the UK.

Friday, 15 March 2019

Macron learns his trade

The outpouring of hostility and hatred towards Emmanuel Macron since the start of the gilets jaunes protest movement, both in the demonstrations themselves and on social media, is unprecedented in the Fifth Republic. At the height of the protests, just before Christmas last year, cardboard puppets of the President were paraded through the streets before being symbolically guillotined. On the back of many yellow jackets were slogans calling for Macron’s immediate resignation and a lot worse. One demonstrator, with calculated crudeness, alluding to the fact that Brigitte Macron is over twenty years older than her husband, wrote on the back of his jacket, “Macron, screw your old woman - not the people” (“Macron, baise ta vieille – pas le peuple”). The mainstream media, whether for reasons of political correctness, embarrassment or  perhaps to avoid being accused of fanning the flames of violence, have not given great prominence to these and many other such expressions, but they have been both consistent and clearly visible for anyone who takes a careful look at the TV pictures, watches the YouTube videos and listens to the slogans shouted in chorus by demonstrators.

The rise of social media with the possibility they offer anyone and everyone to make comments or proffer insults and even death threats from behind a wall of convenient and irresponsible anonymity is of course part of the explanation. Macron is not the only politician to have been targeted. Insults have also been hurled at ministers and MPs from his party, not to speak of inflammatory comments about Jews, homosexuals and anyone else who is seen as “different”.  On many occasions, the verbal violence has overflowed into tags, smashing, looting and physical violence against people and property. At the same time, there has been a fresh and nasty outbreak of antisemitism in both word and deed.

Macron himself though has been the target of the largest number of these verbal attacks from the gilets jaunes and those who hide behind them.  As one would expect, the reasons are multiple and have to do with his own personality, what he is seen to represent in the eyes of many demonstrators and the parts of public opinion that sympathise with their cause, as well as wider reasons touching on the nature of populism.

Starting with Macron's own personality, right from the moment he burst on to the political scene, he has sought to style himself as a man with both a vision and a mission, acting with determination to introduce the reforms that France has shirked for many years.  When he was still only a candidate for the presidency, in October 2016, he said in a newspaper interview that France needed a “Jupiterian” presidency. The moniker has stuck and is used sarcastically against him by his opponents and some media, to characterise his perceived aloofness, handing down judgements from on high and brooking no contradiction.  There can be no doubt about the clarity of his vision or his single-mindedness in pursuing it. But there lies the rub. However clear his vision and objectively justified his policies, his pronouncements often appear, and are presented as such in some media outlets, as tactless and unfeeling. The example of his recent advice to a young man in a crowd is a case in point. Complaining to the President that he had a qualification in horticulture but was unable to find a job, Macron told him in a tone of voice that almost amounted to a scolding that, “I just need to cross the street and I’ll find you one”. Objectively, he is not entirely off the mark. Any young person in full possession of their physical and mental faculties and who really wants a job should have no problem finding one. There are indeed many on offer, even if they are not always gratifying and well paid. And it is also true that too many young people tend to feel entitled, once they have obtained a qualification, to immediately get a job where they can put it to use. Even if  Macron was only intending to make the simple point that the state cannot guarantee that every graduate of every school can find a job in his or her chosen speciality, the message delivered, it must be said with a surprising lack of empathy, created an impression in public opinion that he didn’t really care about the personal circumstances of the young man, simply that there are plenty of jobs around and that, all other things being equal, people looking for work should stop complaining, fill them and stop drawing social benefits.

As a result of this and other spontaneous comments on other occasions, many people have been quick to conclude that the elite in general and Macron in particular, as its most willing and visible expression, are simply interested in numbers, facts and statistics and not in people. Even if Macron, as he explained to an audience recently, comes from no higher in the social scale than an upper middle-class family from the French provinces and has acquired the qualifications and position he holds today by dint of his intelligence and hard work, it nevertheless remains true that many graduates of France’s elite schools have an analytical mindset drilled into them during their training and tend to see any problem as susceptible to rational analysis and solution, without necessarily taking account of the many and varied human factors. French people in general do not like this attitude at the best of times and the gilets jaunes protests have shown that many are more than willing to say so. I don’t think I am alone in feeling that the city of Bordeaux, that has sustained frequent damage during the regular Saturday protests since last November, has been targeted precisely because its long-time mayor, former minister of foreign affairs and Prime Minister, Alain Juppé, upright and principled though he undoubtedly is, but whose family and educational background is almost identical to that of Macron, is nevertheless tarred with the same brush by the gilets jaunes and their hangers-on as another typical example of the “uncaring” elite.

And then there is the populist element too. I was struck by a perceptive article by the journalist who writes the “Bagehot” column in “The Economist”. Last week (March 9th) his article was entitled “Suspicious minds” and focused on the populist predilection for conspiracy theories. To quote one passage: “Since “the people” have numbers on their side, their failure to get everything they want can be explained only by the cunning of the elites, who fix everything behind the scenes, or the machinations of traitors who claim to be on the side of the people but sell out at the last moment”.   Although the article was ostensibly about the U.K on the possible eve of Brexit, these lines encapsulate an attitude widespread among the gilets jaunes and can also explain their adamant refusal to let any one of their number make an attempt to lead them.

Once the surprise and shock of the first violent protests passed, Macron seized the initiative in an attempt to show that he was not impervious to the reasons for them. As I wrote in my last post, the government has introduced a series of measures, which, at a cost of nearly €11 billion and climbing, were designed first and foremost to put more money in peoples’ pockets, particularly those of the low paid from which the gilets jaunes draw most of their support. In his New Year’s address however, he cautioned that “nothing can be built on lies” (“on ne bâtit rien sur des mensonges”) and expressed the wish that truth would prevail (“je fais …un voeu de vérité”).

It is surely significant that nearly all the measures that have been taken or initiated in response to the protest movement have been focused, true to Macron’s oft-repeated commitment, on jobs and employment, as they are nearly all targeted towards people in work. This is obviously true of the earnings-related cash benefit and tax-free overtime, but even the subsidy for trading in an old diesel car for a newer one reaches its maximum level for people who drive more than 60km. a day to get to work and back. To make the point even clearer, his government has also leaned on companies to pay a special New Year bonus to their employees and on the motorway companies to grant big discounts to drivers who use toll motorways every day. The full effect on take-home pay of all these measures will not be felt for some months at least, but their intended impact is unmistakable: to make work pay more. Even if Macron has had to tactically retreat from his European pledge for a lower budget deficit in 2019, the strategic effect of these moves, together with the previously enacted measures to favour apprenticeships and improve the vocational training system will surely show up gradually in lower levels of unemployment.

But the other major development over the past few weeks has been the launch of “The Great National Debate” in which Macron has quite deliberately become personally involved. The idea is to gather from people all over France their concerns for the present and hopes for the future, a remake, over two centuries later, of the Cahiers des Doléances put before the States General in 1789. The gilets jaunes initially dismissed the initiative has “mere bla bla” and public opinion in general was sceptical. But it should never be forgotten that the French love expressing their views and especially their grievances, real or imagined. The great debate has been a great success in this respect. Town halls all over the country have organised well-attended meetings and made registers available for people to write down their grievances and suggestions or paste in their contributions written at home.  The government has launched a dedicated website on which anybody can give short answers to a series of questions on taxation, public services, environmental policy and the trappings of democracy.  And it must be said that Macron, when he has organized and attended larger versions of these town hall meetings himself, has been remarkable in his performances, sometimes spending up to 7 hours in a meeting, listening, noting down and answering questions from rural and urban mayors, young people and pensioners. His mastery of arcane details and willingness to face awkward questions has never been in doubt but faced with real people talking about real bread and butter issues, covered by TV stations broadcasting live, his tone has also softened. What will come of the great debate, how its conclusions will be drawn, what solutions the government will propose and whether public opinion will find them acceptable remains to be seen, but the impact has been considerable and has already, we are told, raised Macron’s poll ratings. The debate is officially due to end on March 15 but will probably go on for longer and Macron has already scheduled visits to parts of the country he has not yet been to.

There are at least two conclusions that I draw from all this. The first is that Emmanuel Macron for all his intelligence, hard work and single-mindedness, has not yet acquired the all-round political maturity that French people expect from their leaders. He has never been a constituency MP, nor the mayor of a city, town or village, the typical background from which almost all national politicians, even graduates of ENA, have emerged in the past. He has never talked on a regular basis to small farmers and shopkeepers, never written a letter to a housing authority on behalf of a constituent, never accompanied standard-bearing grey-haired veterans to pay tribute to their fallen comrades in a quiet village graveyard.  All these almost unobtrusive and unpublicized acts that anchor a politician in a local and regional context and win respect and support weigh heavily in the French collective consciousness. The fact that Macron has never had such experience is surely one of the reasons why many French people have come to find him aloof, haughty and out of touch with the problems of ordinary people. If this reading is correct, the gilets jaunes protest movement is a price he has had to pay for these shortcomings. He is now, belatedly, trying to do something about it, while not losing sight of his overall strategy.

When the French are asked which of their recent Presidents they hold in most affection, they invariably choose Jacques Chirac. They have clearly forgiven his frequent swings from one political platform to another and remember most of all his ability to connect with ordinary people, deriving from his outgoing personality and the deep roots he struck in a rural constituency in the heart of France. Chirac liked nothing more than sharing a joke with farmers while admiring their pigs or cows and swilling pints of beer. Many years of such everyday political activity earned him affection and admiration.  If only he had devoted as much energy to reforming France in his twelve years in power, what a great President he could have been!

Secondly therefore, in order to push through the reforms in which he believes so strongly - and that France so sorely needs - Emmanuel Macron must by now have realised that he needs to win the support and even the affection of public opinion. His recent change of tack is a good start, but the battle is far from over. Even if he is capable of learning fast, the task of becoming a mature, all-round politician will take many months and even years.

Friday, 8 March 2019

Yellow power

The “yellow jackets” (gilets jaunes) have now been demonstrating for fourteen successive Saturdays since November 17 of last year. Over that period, it is clear that the movement has evolved but it is still difficult to pin down exactly what it stands for and what it is ultimately demanding. Presumably, it is only if those demands are met that the protests will peter out, even if the “mobilisation” as the demonstrators put it, has fallen from week to week and even if public opinion, initially very sympathetic to the movement, now seems to have cooled. No uncontested leader capable of formulating such demands has emerged and not much is achieved by asking the demonstrators themselves. Last Saturday, a journalist asked precisely that question: how long would the movement go on?  The answer was, as it has been since the beginning: “as long as it takes” or “we won’t back down” (on ne lâche rien!).

Back down on what?

To dispel one myth straightaway, even if the demonstrators and the shadowy leaders who continue to call for demonstrations every Saturday on Facebook or Twitter, claim that the movement is apolitical and refuse any label other than a yellow one, the movement is intensely political! Its main demands at the outset were for higher living standards, lower taxes and greater “fairness” in taxation, including the restoration of the wealth tax “for the rich”, that Macron abolished at the beginning of his presidency.  Precisely the kinds of political demands that are normally reflected in the programmes of political parties. Another demand however, that still seems to be uppermost in demonstrators’ minds, is the immediate resignation of Emmanuel Macron.

How justified are these demands and are they realistic?

The government’s initial response, although many would say that it came too late, was the abolition of the rises in fuel taxes that had sparked the first protests, followed by a reduction in taxes for those on low pensions and the announcement of a big subsidy for the trading in of old diesel cars for newer ones, the highest subsidy being reserved for low-income families driving more than 60 km. a day and buying a new or even second-hand electric vehicle. In addition, the negative income tax system, in effect an earnings-related cash benefit for the low paid, was extended to employees earning one and a half times the minimum wage. The government also announced that payments for overtime, including in the public sector, will once again be exempt from income and payroll taxes. The response to these measures has been massive. The demand for more environmentally friendly vehicles has far outstripped official expectations and there has been a considerable increase in applications for the earnings-related benefit, to the extent that the administration for family allowances that processes them has had to take on extra staff to be able to cope. The initial cost of these measures is put at about 11 billion Euros, more than three times the amount of revenue produced by the hated wealth tax. The final cost will probably be even higher, once all the new vehicles have been purchased, the subsidies paid out and all the successful applicants for the earnings-related benefit are receiving it on a regular basis. The amount of tax revenue foregone because of the non-taxation of overtime is also unknown at this stage.

At first blush then, at the cost of a larger budget deficit and more public borrowing, the demand for higher living standards has been met, even if many have not seen the impact as yet on their monthly earnings or benefits. Why then has the movement not stopped? Going back to the last big social upheaval in 1995, it was caused by the government plans to put an end to the perceived and costly pension privileges of public sector employees, particularly public transport workers. When they brought the country to a standstill for over a month, Alain Juppé’s government dropped the reform plans and things returned to normal.  The big difference between then and now is that the public sector unions called that strike, managed talks with the government and called it off after winning the day. This time, the protests have been more spontaneous and focused not only on a rejection of a specific government policy but on a more diffuse feeling of malaise. In addition, they have taken place outside the traditional political parties and trade unions, who, whenever they have tried to jump on the bandwagon, have been firmly rebuffed.

The fact that the movement has continued long after these concessions have been made and that thousands of demonstrators are still turning out, even if their number are dwindling, in towns and cities all over France every Saturday, suggests that other factors are also at play.

The first possible answer is that the government is not yet seen to have done enough to improve living standards. Objectively, this is surely debatable, but the perception of unfairness is strong. Clearly there are people who find it hard to make ends meet at the end of each month. Reports suggest that although France’s all-encompassing tax and benefits system does more than in any other EU country to reduce income inequality, over and above the provision of universal health care and education, cash benefits do not always flow to those most in need of them – particularly, reports suggest, people living alone and single parent families,  whose numbers are said to have increased substantially in the past few years. If this is indeed the case, some tweaks to a system of benefits that has seen many others in the past should be enough to solve the problem. The government has indeed shown that it is aware of these problem by extending the biggest increase in the earnings-related benefit precisely to single-parent families.

Another explanation is the relative geographical isolation of many of the first demonstrators, the ones who filtered and sometimes blocked traffic on roundabouts in rural and above all semi-rural areas of France. It is true that many such areas, described by the somewhat catchall phrase of “La France Périphérique”, often depend on one economic activity or even one large factory. If that factory closes because it has become uncompetitive in a European market of 500 million consumers, people are either out of work or forced to seek work further away, meaning longer journey times, usually by car. Often enough, it also means the closure of essential public services like the post office, public transport, the local clinic or school.  The inexorable rise of large metropolitan areas around Paris, Lyon, Marseille, Bordeaux or Toulouse to the detriment of smaller towns or semi-rural areas has created a lot of “left-behind communities” as they were recently characterized by “The Economist”, with fewer job prospects, fewer public services, poor internet access and facing a very uncertain future for themselves and their children.  This phenomenon is not of course peculiar to France and, as many commentators have pointed out, can account for the rise of populist parties in many other European countries, let along the United Sates. But within Europe, France is a country with a vast land mass from which small farmers and small industries have been gradually disappearing, leaving large tracts of the country overpopulated and underused. Peoples’ feeling of despair for themselves and future generations seems to me to be a major key to the gilet jaunes movement. The rise in fuel taxes introduced by the government to reduce carbon emissions was, in this reading, the last straw for many people who have come to feel for some years now that they and their towns or villages are ignored by decision-makers “in Paris”, who have forgotten or abandoned them by gradually depriving them of public services, while still requiring them to pay the same high taxes as everyone else. Political parties like Marine Le Pen’s Rassemblement National or Jean-Luc Mélenchon’s La France Insoumise have largely capitalised in the past on the anger and resentment born of this predicament.  But even they do not seem to have benefitted politically from the gilets jaunes movement, if opinion polls are to be believed. As if their policies, consisting basically of closing borders, keeping immigrants out and generally turning the clock back to a mythical golden age have failed to convince even those to whom they would appear to be the most attractive.

And then there is the explanation focusing on the political dynamics of insurrection and revolution in a country with a such a rich legacy of revolutionary upheavals. Political though it is, the gilet jaunes movement has actively resisted all attempts to structure itself and bring recognised leaders to the fore who could be spokespersons for their demands and engage ministers and senior officials. Indeed, any putative leader who has put his or her head above the parapet has been shouted down, insulted and sometimes physically threatened or assaulted. The first example that comes to mind is that of a single mother with a lowly job as a nursing auxiliary, Ingrid Levavasseur, who set out to establish a gilet jaunes list for the European elections in May. The campaign from within the movement against the very idea of engaging in conventional politics and against her personally was so intense that she soon decided give up. All this suggests to me at least that strings are being pulled in the background to ensure that the movement does not evolve into anything resembling a political party but, on the contrary, keeps its insurrectional and revolutionary characteristics. Those pulling the strings are probably activists from the radical left or the radical right, many of whom are known anti-establishment and anti-capitalist figures and it is they who are largely responsible for triggering the insurrectional violence that has regularly attended the Saturday demonstrations in cities like Paris, Toulouse and Bordeaux.

In his seminal work “A History of Modern France”, published in 1964, the British Professor of French history, Alfred Cobban, writes the following in the chapter entitled the “The Decade of Revolution”:

“..mobs require leaders and to provide this intermediate leadership, an underworld of political agitators and journalists grew up which was capable of being used, when the revolutionaries themselves split, by one faction against another, and in the end, of becoming a power in itself.”

Replace the “journalists” that Cobban refers to by the shadowy figures active on social media, and the mob of 1789 as he describes it, is somewhat reminiscent of the gilets jaunes of 2019. Of course, the society and political infrastructure of the Fifth Republic are nothing like that of pre-revolutionary France, so it is more likely that the demands of the gilets jaunes will eventually and successfully be taken up by existing political parties or that the movement, shorn if its more radical elements, will evolve into a proper political party of its own with an undisputed leader. After all, in just two years, Emmanuel Macron himself created an entirely new political movement that drew in figures from the existing centre-left and centre-right political parties, that won him the presidency and a large majority in the Assemblée Nationale. But there must also be a chance, to paraphrase Cobban, that the gilet jaunes will develop into a revolutionary-like power in itself.

This revolutionary aspect could not be more clearly illustrated than by frequently reiterated demands for the immediate resignation of Emmanuel Macron. One of the least comprehensible aspect of the movement is the angry hostility and even downright hate that has been directed to the person of the President, elected not even two years ago on a platform to get France growing again and bring down the unacceptably high level of unemployment, particularly among the young, surely one of the major causes of social inequality.

What has happened? Where has the President gone wrong? How has he reacted and, short of resigning, which is clearly not on the cards, will his reaction start to solve the issues that triggered the upsurge of protest back in November? I shall try and answer these questions in another post.