Entrenched inequality

The protests and demonstrations all over the world after the killing of George Floyd in Minneapolis have exposed a festering little hypocrisy in French society. An unauthorised demonstration in front of the main court building in Paris last week, called only on Facebook, attracted, to general surprise, an estimated twenty thousand people at a time when large demonstrations were still banned because of the risk of spreading the coronavirus.  The immediate reason for the protest was the death in police custody four years ago of a young black man called Adama Traoré, the cause of which has never been unequivocally established and which members of his family and community attribute to unwarranted police violence during his arrest. The shocking death on video of George Floyd under the knee of a white police officer has triggered a fresh call for “Justice for Adama” that the demonstrators feel has never been done.

Racism targeting black and brown people in France is as prevalent as it is in many other countries.  What is different in France however is the way it is treated by the state.  A time-honoured tradition, originating in the revolutionary era of the late 18th century, holds that the population of France is not made up of different “communities”, but only of “citizens” with equal rights in a “one and indivisible republic”. A lofty ideal indeed, but one that has been badly battered by subsequent developments in society, particularly since the start of large-scale immigration in the middle of the 20th century.

The problem starts with names and expressions. Whereas in the UK for instance, one hears constant references to BAME (Black, Asian and Minority Ethnic) communities, in France there is no such designation. Sociologists and statisticians are not allowed to gather any specific information about such “communities” as officially they don’t exist. The furthest the Prime Minister, Edouard Philippe, was willing to go in a nicely phrased soundbite the other day was to refer to “a part” of French society that felt that “the republic was not doing enough to protect its children”. Present Macron followed up a day or two later referring to racism in general as “a betrayal of republican universalism”. It follows, understandably therefore, that the term Afro-Américain used widely by French journalists to designate George Floyd is rejected by many. “Why Afro-American?” commented one newspaper reader recently. “Would one call someone from Martinique an Afro-French person?”. The guardians of correct French in the newspaper “Le Monde” have made their views clear in their blog: the term Afro-Américian, they write, is discriminatory in itself. George Floyd was, and should be referred to simply as “un Américain”.

Admirable, one might think, in theory, but in practice a definite problem.

While its known for instance that a higher proportion of people have died from Covid-19 in the northern suburbs of Paris than practically anywhere else in France, this knowledge remains purely anecdotal as no statistics are, nor can be, compiled, about different death rates in different communities and neighbourhoods. The northern Paris suburbs are known to house, in huge and unattractive housing estates, large numbers of people who are described in the media as “people of immigrant origin”. They tend to be poor, often have large families and small apartments, and are more likely to be either unemployed or employed in unskilled jobs as casual and sometimes unregistered labour.  In terms of security and policing, these areas, euphemistically referred to as “difficult neighbourhoods”, are known to harbour thriving hubs of drug trafficking and other underground activities.  Anyone wishing to find out more need go no further than the novels of Olivier Norek, a former police officer turned author and script-writer (Code 93 or Territoires) or films like Les Misérables, by Ladjy Ly, brought up in one of the neighbourhoods he depicts in his film. Its title is deliberately lifted from Victor Hugo’s eponymous 19^th century novel and last year, it won the jury’s special prize at the Cannes Film Festival before being in contention for the best foreign movie at the Oscars.  Another landmark film, “La Haine” by Matthieu Kassovitz is now 25 years old.

Nobody in France, least of all in government, can therefore deny that there is a problem and that it has been around for many years.  The police, who are supposed to maintain “republican order” in these “difficult neighbourhoods” know full well who and what they are up against but have not always displayed sound judgement and great skill in doing their job, to say the least. For their part, youths from black and North African communities constantly complain of being subject to police harassment and sometimes violence. Cases like that of Adama Traoré or that, over ten years ago of two black teenagers who took refuge and were electrocuted in an electricity sub-station after being chased by police, regularly hit the headlines and trigger violent demonstrations. And although there are clearly racist tendencies in the police, as the discovery of a closed group of police officers on Facebook, riddled with racist comments, demonstrates, these exist in all parts of society and police representatives are quick to point out that they are often unfairly singled out for criticism in doing their job.

Despite special efforts to promote children of immigrant origin (anonymous CVs for job seekers, special scholarships at universities and “grandes écoles”etc.) which in any other country would be called positive discrimination, one can’t help feeling that national unity might be better served by officially admitting that specific communities are victims of specific discrimination and trying to get to grips with the detail and extent of the phenomenon. The recent demonstrations, sparked by the killing of George Floyd and calling for a reopening of the case of Adama Traoré, show that anger and indignation in these communities run high. Many other demonstrations have taken place since, all over France, in which the demonstrators are largely black, and posters inscribed with “Black Lives Matter” and “No Justice, No Peace” are prominent. The public debate was given a further twist yesterday when the government spokeswoman, Sibeth Ndiaye, black and of Senegalese origin, spoke in favour of breaking a taboo and compiling “ethnic statistics” only to be roundly contradicted by President Macron a few hours later, who said that only specific anti-discrimination measure can be envisaged.

Republican values on citizens and equality strike a chord in the French national psyche and for many French people are one of the big and positive differences between France and countries like the UK and, above all, the US. But France’s numerous and able statisticians would surely be quick to remind politicians that they can’t properly manage what they can’t properly measure.

Back to square one ?

In her excellent book on Emmanuel Macron and the background to his rise to the presidency of France in 2017, (Revolution Française – Emmanuel Macron and the quest to reinvent a nation – Bloomsbury, 2018) Sophie Pedder, the Paris bureau chief of “The Economist” quotes part of an interview that Macron gave just a few months after becoming President: “I’m not made to lead in calm weather,” he said “my predecessor was, but I’m made for storms”. Indeed, there have been many testimonies to his poise and self-control, in Pedder’s book and other accounts since. At the height of the gilets jaunes protests in November 2018 for instance, when violent demonstrators seemed determined to march on the Elysée Palace, Macron was reported in the following week’s “Canard Enchaîné” as being expressionless and unmoved (“de marbre”) in the face of what his security staff considered an imminent threat. He didn’t budge.

As Macron now faces the second, almost perfect, storm of his presidency, he will need all the poise and self-control he can muster in deciding what to do next.

The effect of a storm is to throw a ship off course. In this case, the ship of state. How far off course depends on one’s view of where Macron has been taking France since he became President in May 2017. Contrary to what his political opponents and many in the media seem to think, his overall strategy has not been to open up France to the forces of “ultraliberal” capitalism, favouring the rich to the detriment of the less well off, but to make all French people a little less reliant on the state and its comforting but also stifling embrace, and a little more reliant on their own efforts. State intervention in the economy and the cast iron social safety net that the French enjoy at the price of high taxes and high public debt has been shifted only slightly. Or, more precisely, had been shifted only slightly before the epidemic of Covid-19 hit the country.

Running through most of France’s policy shifts since 2017, including those that have not yet been finalised, it is indeed this “liberal-light” theme of more self-reliance that seems common to all of them. The initial labour market reforms, making it less complicated and, above all, less costly to hire and fire workers had started to make a dent in some of the highest unemployment figures in the OECD. The subsequent education and training reforms, putting the choice of training schemes in the hands of employees themselves and taking it away from social partners, is credited with a big increase in apprenticeships and other training courses. The reform of the generous unemployment benefits scheme would have been a lasting incentive for the unemployed to seek retraining and find a job more quickly. But as this reform had not actually come into force by the time the Covid-19 crisis struck, it is now in limbo, some of its provisions have been put on hold and are likely to be reversed. And then of course there was the major reform of pensions, designed to adapt the pension system to a modern, post-industrial economy and also to reduce pressure on the public purse, but which had generated only controversy and confusion before the crisis. It is now on hold too and, according to some sources, more than likely to be abandoned altogether.

As he leaves his Prime Minister to oversee the precise measure to relax the lockdown from May 11th onwards, the number of employees furloughed under a state sponsored scheme settles at around 10 million, the country’s public debt to GDP ratio creeps onwards and upwards, as the state “invests in debt”, as Gérald Darmanin, the budget minister put it quaintly in a TV interview the other day, and as the latest unemployment figures soar and can only get worse, the question is whether Macron can, or indeed intends to, revert to the same course he had been charting previously, at a time when the natural reflex of most people, and not only in France, is to turn to the state for help and protection. Indeed, the man himself, in his nationwide address on April 13th, seemed unsure of his future course of action, concluding with the words, “we must all reinvent ourselves, starting with me” (“nous devons tous nous réinventer, et moi d’abord”). What that enigmatic phrase will ultimately mean remains to be seen.

For the time being at least, the French government has little choice but to continue to cope as best it can with the impact of the coronavirus and its economic fallout. Luckily, its extra borrowing is still at negative interest rates, a relatively comfortable situation which indicates that lenders have not yet lost trust in the French state’s capacity to repay its debts. But the prospect of higher interest rates is never far away. An unguarded comment by the new President of the European Central Bank was enough to push up interest rates on long-term Italian debt and the recent judgement by the German Constitutional Court has not made life any easier for the ECB to buy as much sovereign debt as it judges necessary to maintain a credible stance as lender of last resort. All this is a far cry from the situation that Macron would undoubtedly have preferred, to reduce deficits and outstanding debt and thus elicit a more favourable response from neighbours like Germany and the Netherlands to the request to loosen their own purse strings in favour of greater European solidarity.

In a recent article in “Le Monde”, Cédric Pietralunga, a journalist, writing about Macron's possible post-lockdown strategy, quotes him as saying, “of course we must protect, but protection doesn’t mean anesthetising people, as if there were nothing else to be done.” (“on doit assumer de protéger mais ce n’est pas protéger pour anesthésier, pour dire qu’il n’y a plus rien à faire”). He goes on to write that, “wanting the French to be more self-reliant is nothing new for Emmanuel Macron” (“cette envie de voir les français se prendre en main n’est pas nouvelle chez Emmanuel Macron”) referring back to his first New Year’s address to the nation in which he paraphrased JFK’s famous call, “ask not what your country can do for you but what you can do for your country”. The government spokeswoman, Sibeth Ndiaye, is quoted in the same article as saying, “the basic message is that the state alone cannot find the solution to relaxing lockdown…it’s only if everyone feels that they have their own contribution to make that we shall be able to come through this.” (“le message au fond est de dire que l’Etat seul ne peut résoudre le déconfinement … c’est parce que chacun se sentira dépositaire d’une part de la solution qu’on pourra surmonter.”). What is missing in such messages, as well as journalists’ comments on them, is the link between more or less self-reliance and the sustainability of France’s social model. The more people rely on the state, the more taxes and debt are bound to rise, a message that the French don’t really want to hear, certainly not in the present circumstances, and that very few politicians, including Macron, have yet dared to spell out in so many words.

However he decides to “reinvent himself”, Macron too, for the time being at least, has little choice but to batten down the hatches and limit the storm damage, while trying to persuade other ships of state to come to the rescue. A tactical change of course is undoubtedly essential before the overall strategy can move on again. This tactical change will last until the storm has blown over, probably by the time of the presidential election campaign in just two years’ time. Only then will we have a clearer idea of whether the French are likely to give Emmanuel Macron a second chance to continue, in Pedder’s words, “his quest to reinvent a nation”.

Life behind the lines

France is at war according to President Macron in his televised address the other day – at war against an invisible and elusive enemy (un ennemi invisible et insaissisable). The view from the front line is brought to us every evening on the 8 o'clock news, with scenes (often the same from one evening to the next) from hospitals and care homes, helicopters, aircraft and specially adapted high-speed trains, all taking critically ill patients from hospitals that are full to others, all over France, that are not, but also to neighbouring German and Swiss hospitals, interspersed with gut-wrenching interviews with admirable and overworked medical and nursing staff.

Life behind the lines is a lot less dramatic, even if we are constantly reminded that we are all doing our bit for the war effort by staying at home. On the first morning of lockdown, I dutifully filled in my attestation de déplacement dérogatoire, wondering what we would call this marvel of French administrative prose in English. One British journalist writing about events in France referred to it, rather pompously, as “an exeat” – somehow, I can’t imagine a policeman asking me for my “exeat”! But then no UK government would dream of imposing such a constraint in the first place. An English friend wrote that she wasn’t happy about being told what to do and what not to do; I answered that the French weren’t either, but that they are more used to it – and more used to finding ways around it.. That being said, it’s now almost three weeks since the lockdown was imposed, and I have seen neither hide nor hair of a policeman, let alone been challenged to produce my document. Keen to make well-publicised examples of motorists fleeing down the motorway to their second homes, they obviously don’t bother to venture into the smallish town centre, and certainly not the side streets, of a quiet residential suburb.

And quiet the streets are. Eerily quiet. No sound of cars driving to work in the rush hour, just the sound of birdsong early in the morning. I even heard a seagull yesterday, obviously not taking confinement very seriously.  The hoardings for the first round of municipal elections on March 15^th, that now seems months ago, have not been removed.  Work has stopped on most building sites, including that of a major rebuild of the local technical college, but not, curiously, on complex and heavy lifting engineering work to repair an embankment that subsided onto our local railway line at the beginning of February. A dozen workers toil six days a week, with helmets and heavy-duty gloves, but without facemasks, and hope to have finished by the time we are deconfined. The only other sounds that float up to our open fourth floor windows are kids tearing round the garden of our building on their bikes and a lone teenager bouncing a basketball before practising his throws. In the road outside, a father sets up makeshift goalposts every afternoon, quickly removed if a car comes by, to play football with his four children.

The French are reputed to be an unruly lot but everybody I have come across on my daily walks to the shops or around the neighbourhood observes strict social distancing, crossing the road if they see someone coming towards them and waiting quietly outside shops behind the floor tape markings, one meter apart. Yesterday, I met a neighbour walking towards me on the same side of the road. As he normally cycles to work and takes long cycle rides at the weekend, I asked him, from a safe distance, why he hadn’t taken his bike out, realising as I said it that nobody is supposed to stray further than 1 kilometer from home.  To my surprise, he answered “No, I wouldn’t do anything like that” (Non, je ne m’autoriserais pas cet écart). Would the French be as civic spirited if there weren’t the threat of a fine? Some certainly wouldn’t, but my feeling is that the vast majority would, a situation not very different from that of most other countries faced with this nasty epidemic.

Municipal parks and woodlands being closed, the only places where you are likely to meet more than one person at a time are the shops. As our fresh food market was closed down just after the start of lockdown, I have fallen back, like many others, on the local convenience store which is just a ten minute walk away, as well as the local bakery; deprived of freedom to roam is one thing, doing without a crispy baguette is quite another! After the initial panic buying, mainly of foods like pasta and flour rather than toilet rolls (the French have their priorities right!) the shops are now more or less back to normal. As each palleted delivery arrives, every single employee I have ever seen at the shop descends on the aisles, unpacking, stacking the shelves and piling up flattened boxes. French labour laws are reputed to be notoriously inflexible but this shop, like many others, seems to have worked effectively around their constraints.

Lockdown started on March 17^th and has now been extended in two stages beyond April 15th. President Macron will be on nationwide TV on Monday evening to tell us what’s next. Judging by the Chinese experience, we could be in for another month, maybe more. With or without compulsory facemasks, still in short supply and reserved for health care workers only?  With a massive campaign of blood testing that our German neighbours seem to be able to organise with consummate efficiency, or without? With a “Stop Covid” mobile phone app. designed to trace our movements, that has sparked the predictable debate about civil liberties and the protection of privacy? As if the very fact of confinement were not in itself a massive restriction of personal freedom. We shall undoubtedly find out more on Monday, but these are all areas where the French government, like many others, has clearly been caught napping. A week ago, I made myself a makeshift facemask using a piece of cloth and two elastic bands, on the basis of a YouTube demonstration by the US surgeon general. A daughter-in-law has gone one better and put her sewing machine to work for the whole family; two very professional looking facemasks turned up in the post on Friday morning. Like most people, I’m not sure now useful if it is as a protection from the virus, but it is psychologically comforting when you are in a confined space like a shop or a pharmacy. As for blood testing, imagining myself an asymptomatic carrier, I asked a nurse who came to the house yesterday when she thought the local testing laboratory would be able to run blood tests on request to find out who has developed antibodies and who hasn’t. She looked blank before answering that it would take at least another two weeks. That takes us to the end of April. Kids are supposed to go back to school on May 4^th, but that seems more and more unlikely.

We shall no doubt find out more on Monday evening.

Whatever it takes !

The former President of the European Central Bank, Mario Draghi, will go down in history for three words that he uttered at the height of the Euro crisis in 2012. His famous sentence “The ECB is prepared to do whatever it takes to preserve the Euro” pronounced on July 26, 2012, is widely credited with having saved the Euro from imminent collapse. For his nationwide TV address on the coronavirus crisis last Thursday evening, President Emmanuel Macron found an excellent French equivalent. The French government would take every necessary measure to protect the population and the economy, “quoi qu’il en coûte”, he declared.

It is of course an enduring feature of French history that in times of crisis, when the people are not rising up to try and overthrow their government, they expect it to take the lead in organising and financing whatever measures appear necessary for the common good. During his short presidential term, that has not yet run three years, Emmanuel Macron has already experienced both types of crisis – the “gilets jaunes" movement with its attendant insurrectional violence in late 2018 and early 2019 and today, the coronavirus crises. In his nationwide address on Thursday evening, he did not disappoint, stating no less than three times that the state would do its duty “quoi qu’il en coûte”. His stated reliance on expert medical opinion, an implied sideswipe at conspiracy theories flourishing on social media, also sounded convincing, at a time when, as “The Spectator” put it the other day, “a social media lie often has greater power than the considered opinion of an expert”. I found myself thinking that for someone who had had so little political experience before being elected President, he has come a long way since May 2017. Can anyone seriously imagine the self-styled leader of the opposition and candidate against Macron for the presidency in 2017, Marine Le Pen, delivering such an address?

The “whatever it takes” will nevertheless have a high cost. Bruno Le Maire, the finance minister, spelt out the next day that “several dozen billion Euros”, would be needed to fully compensate businesses obliged to put their employees on short time work, pay out loss of earnings to employees and the self-employed, postpone tax and social security levies etc. etc.  And that was before Saturday’s announcement by the Prime Minister that cafés, restaurants and other non-essential services would be closed down for an indefinite period. The commitment is clearly open-ended as nobody knows at this stage for how long such measures will be necessary. And the fiscal impact will be substantial, meaning that, “the 3% deficit target demanded by Brussels will not be met this year”, as a radio journalist unhelpfully and inaccurately noted. Of course it won’t, but then it hasn’t been for most of the past 40 years. 

Taking a big step back from the fast-moving situation of the coronavirus epidemic, not only in France but throughout Europe, it is sad but true that so many countries have made no serious attempt during the boom years to tackle the underlying reasons for the expansion of public spending and implement the kind of structural reforms that the OECD for example has been urging for years, rather than take the easy way out by starving essential public services of cash that only the state can provide. Had they done so, they would be better placed to face a situation like that of today, in which public spending is both essential and inevitable. Taking just three examples from around Europe, Italy’s public health system has been struggling for years to cope with the austerity that has been imposed on it, UK governments of the past ten years have systematically made cuts to the National Health Service, France’s public hospitals have long been protesting about dwindling investment and staffing levels. Most commentators in France seem to agree that for all his reforming zeal, Emmanuel Macron has done little to curb the seemingly inexorable upward movement in overall public spending, let alone start to reduce it.  To do so, he would need, as many have advised, to initiate a radical reform of the tentacular civil service in order to dramatically increase its overall productivity, oblige the state to relinquish areas of the economy in which the private sector would be better equipped to impose the necessary financial and management disciplines and prepare the national budget for precisely the kind of crisis that France is facing today. None of this of course can be done overnight, and the next major national elections are looming in just over two years’ time. Pension reform, in which many have placed their hopes of stopping a permanent drain on the public purse, has been contested every step of the way and has not yet cleared all of its legislative hurdles. Even if it eventually does, it will not produce tangible results for many years. But in the very real here and now, Emmanuel Macron is facing his second major fiscal splurge in as many years.  

A tale of two companies

February and March are the months in which companies all over the world release their financial results for the previous year. France is no exception and the results season in Paris is now in full swing. Two companies particularly are in the public eye at this time: Aéroports de Paris (ADP) and La Francaise des Jeux (FDJ). Their respective destinies are an interesting illustration of French peoples’ contradictory attitudes to companies in general, their role in wealth creation and the role of the state as a shareholder, attitudes which are also reflected in the ongoing national debate about pension reform. 

ADP is the operator of the very lucrative Paris airports of Roissy, Orly and Le Bourget. The French state has a controlling stake in the company but privatised it partially in 2006, during the presidency of Jacques Chirac, keeping just over 50%. Anyone who bought shares at the IPO and has kept them ever since would have seen them increase in value by well over 200%, not counting a regular and comfortable yearly dividend. The current government’s intention to sell its controlling stake to investors has generated a wave of intense and vocal hostility in some sectors of public opinion, to the extent that the whole operation is at best delayed and at worst in doubt.

FDJ is the operator of the very lucrative French national lottery. It was wholly owned by the French state until last November when 80% was sold, effectively privatising the company. The operation was oversubscribed to the extent that orders from small investors were served in totality and larger orders were reduced. The introductory share price was at the top end of the expected range, rose by about 15% after the IPO and stayed there. The announcement of the company’s results for 2019 have boosted it by a further 15%. The government has congratulated itself on a resounding success.

It is difficult to fathom why the prospect of one privatisation has attracted so much popular hostility while another actual privatisation has been such a popular success. Both companies share similar characteristics. Both can be described as “safe”, in the sense that they can both continue to do well in an economic downturn. Both are de facto monopolies, both are well managed by teams of former top civil servants with close links to government, the core activities of both will continue to be subject to some degree of government regulation, both will serve regular dividends. Neither can be moved offshore.

An expression often used by opponents of the privatisation of ADP is that the state is selling its “crown jewels”, an expression that could equally well apply to FDJ. The state wants to privatise ADP “just because it needs the money” is another, often heard, criticism, as if this were a heinous crime on the part of a state whose public debt to GDP ratio is now over 100%. The same point could be made about FDJ but never is.

The real sore point among opponents of the privatisation of ADP appears to be the mooted suitor for the government’s controlling stake, the construction company, VINCI, that took an 8% stake in ADP in 2006 and has made no bones of its ambition to take it over when it is fully privatised. VINCI’s original sin, in the eyes of these opponents, is that it became the concession holder of a large network of French motorways when the state sold them at about the same time as it partially privatised ADP. Since then, the motorways and the company that runs them have been the subject of endless controversy: the tolls are “too high” and have “increased more than inflation” and “motorists are being wildly overcharged”, “the state sold them far too cheaply in the first place”, etc. etc. Few opponents seem prepared to accept the argument, which is hardly ever heard, that large infrastructure projects can either be paid for by the state budget out of general taxation or by their users. In the case of the motorways, there seems to a good economic rationale for the second option as, contrary to public services like the police, the courts, health care, pensions and education that stand to benefit everybody, infrastructure primarily benefits its users, many of whom, it should be noted in passing, are drivers from outside France and not therefore subject to French taxation.  Nobody seems willing to admit either that since purchasing the motorway concessions, VINCI has done an excellent job of managing and maintaining them, that motorists flock to them to speed down South or out West come holiday time, complaining all the way to the toll booths as they go.  Populist politicians, mainly from the hard left, fall over each other to denounce a capitalist conspiracy to cheat the state and gouge motorists.  At the height of the gilets jaunes protests at the end of 2018, toll gates were often delberately opened by protestors and sometimes even destroyed by fire. A number of the perpetrators have recently been convicted of arson and wilful damage by the courts.

Mainly as a result of the gilets jaunes’ demands for a "peoples’ referendum", the French government felt obliged to concede that any issue of “major” public concern could be put to a referendum of this kind if a petition to request it was signed by 10% of the electorate. Opponents from both the left and the right wings of politics were quick to seize this opportunity and launched a petition for a referendum on the privatisation of ADP. They seem very unlikely to gather the 4.7 million signatures necessary by the deadline of March 12th. What the government will do then is uncertain, but it will certainly not take any controversial decision quickly, just a few days before the first round of municipal elections and still embroiled  as it is in trying to get legislation on pension reform through parliament. 

Meanwhile, VINCI has purchased control of London’s second airport, Gatwick, after acquiring a string of Portuguese airports some years ago, positioning itself as a major airport operator worldwide. Like LVMH or Airbus and other successful and world-renowned French firms, it could become another French champion. But strangely, many in France seek to deny it that role. This is all the more puzzling as those who have complained loudly about high taxes, and particularly the gilets jaunes, do not seem to want to realise that the more they ask the state to do, the less likely it is that taxes can be reduced. And the more likely it is that those public goods that so many rely on throughout the country like the police, the courts and other universal public services, will continue to be starved of cash.

Funnily enough, it was France under Napoleon 3^rd in the 1850s that pioneered the concession of public services to the private sector - what would be called “outsourcing” in today’s jargon. Water was the first of them and led to the creation of private companies like Lyonnnaise des Eaux or Compagnie Générale des Eaux, that are still around today, even if in different guises and under different names. Most consumers pay privately owned water utilities for their water supplies without a murmur and many of them are probably unaware that these “public services” are outsourced to the private sector. Telecommunications, after being a state monopoly for many years, is run today by four private sector operators in a competitive market. Now that FDJ has been privatised with a minimum of fuss, the controversy over infrastructure concessions in general and ADP in particular is all the more difficult to understand. To coin a phrase often heard in a country supposedly steeped in Cartesian logic, " c'est pas logique " !

Striking the old year out...

As predicted in my last post, the public transport strike has turned into a battle to influence public opinion between the government and France’s most militant trade union, the CGT. Its secretary general, Philippe Martinez, declared over the weekend that Emmanuel Macron has reached his “Thatcher moment”, meaning presumably that he is determined to fatally weaken the power of trade unions to oppose his reforms. In response, the secretary of state for transport has accused the CGT of trying to bring the country to a standstill and intimidating non-strikers. There is surely some truth in both assertions.

For all its rhetoric, it is easy to forget that the CGT, although strong among train drivers, has seen its influence erode for a number of reasons since the last big public transport strike of 1995. Its former pride of place among unions has been taken by the more reformist CFDT and its leader's stance is not always supported by his own rank and file. It is also worth pointing out that union membership in France in general is among the lowest in industrial countries and concentrated in the sprawling public sector. The spread of the Internet has not only enabled many people to work from home but has also facilitated last-minute on-line reservations for car-pooling rides and trips on long distance coaches and buses (largely liberalised by Emmanuel Macron himself when he was a minister under François Hollande). “How come the trains are empty?” asked one seemingly surprised anchor man on the evening news two days ago, as cameras panned slowly over half empty carriages in high speed trains. The obvious answer seems to be quite simply that many French employees and/or holiday makers have made alternative arrangements to get where they want to go, to work, to join their families for Christmas or take a holiday on the ski slopes. If the usually rapid and efficient trains are seen as temporarily unreliable, they grumble a lot but are quick to find alternatives. Driving of cars, scooters of all kinds, from near motorcycles to electrically driven runabouts, bicycles and walking have increased massively as a way of getting to and from work for instance, and by the time the Christmas holidays end on January 6, strikers, and more importantly, the top managers of the SNCF, will probably have drawn the conclusion that the much feared competition to public sector trains and metros has already arrived. People have been able to adapt and can no longer be stopped going about their business by strike action, as was the case before the Internet era. Some strikers seem to have drawn such a conclusion already and their number has fallen steadily over the past week or so. And thanks to 4G enabled smart phones and mobile apps, it is now possible to see which trains and metros are running and adjust travel plans accordingly. In all likelihood, the strike will eventually peter out, despite desperate and largely illegal action by CGT members to prevent trains running by physically occupying their tracks or temporarily cutting power supplies to some areas.

The government, it must be said, has also, played a skilful hand, even if its announced  grand design of a “universal” pension system had had to be sacrificed for political expediency, in application of the age-old principle of divide and rule: the police force, the fire service, airline pilots, stewards and stewardesses, fishermen and ballet dancers at the Paris opera have all been bought off with promises of specific arrangements for their pension scheme and retirement age, but the determination to put an end to the remaining retirement privileges of many public transport workers and public sector workers in general remains intact.  With some further face-saving concessions in the negotiations scheduled for early January, the government is still likely to have a points-based system for pensions adopted by parliament in 2020 and ensure that when it is finally introduced in 2025, for everyone except those entering the workforce before then, the deficit of between 8 and 17 billion Euros predicted by the official pensions watchdog will have been reduced to zero.

All this being said, the political price that Emmanuel Macron will ultimately have to pay for his probable victory remains uncertain. It was interesting to see for instance that for the first time last Saturday, a street demonstration saw members of the CGT and a large number “gilets jaunes” marching side by side. Does this mean that they have found common ground, and will this show of unity lead to anything? Somehow I doubt it, given that for the moment the only factor that unites them is their intense dislike of the President and their distaste for his reforms.  The next big national test will come with the country-wide municipal elections next March. Macron’s party, la République en marche has invested heavily to prepare them, by selecting or supporting candidates for all of France’s major cities and most towns. The “gilets jaunes” for their part, have not moved on much from their stance as a protest movement and the unions traditionally play a very minor role in such elections anyway.

As we strike the old year out and ring the new one in, the only certainty is that 2020 will be another eventful year for France!

Wishing all my readers a very Happy New Year!

A strike for pension reform

Former French Prime Minister Michel Rocard once quipped that “pension reform has the potential to bring down several governments” (avec la réforme des retraites, il y a de quoi faire sauter plusieurs gouvernements). On Thursday of this week, France will suffer once again what promises to be a more or less total shutdown of public transport in the Paris area, a very limited number of mainline trains in the rest of the country and union sponsored street marches, probably accompanied by masked and helmeted hooligans hiding behind them. Many people who remember the three week long public transport strikes of 1995 are openly wondering whether the current President and his government will suffer the same fate as President Jacques Chirac and Prime Minister Alain Juppé, who were eventually forced to retreat ignominiously and withdraw the pension reform that they had proposed. In 2019, Emmanuel Macron’s chances of bringing his five-year term to a successful close by introducing a reform that has been fiercely resisted every time it has been attempted, hinge on the outcome of this show of force. Be that as it may, it is such repeated failures to bring about fundamental structural reform that have earned France a reputation among foreigners for being ungovernable.

The terms of the current conflict are deceptively simple. Back in 2016, when Emmanuel Macron announced that he was standing for President in 2017, he declared that one of his main policy ambitions was to reform the French pension system, turning it into a “universal scheme” in which every contribution would give rise to the same pension entitlement, regardless of whether one worked in the private or public sector or was self-employed. The simple message was that “1 euro of contribution would give the same entitlement to every pensioner”. Nothing was said at the time about raising the retirement age or increasing contributions or the dire and converging forecasts about future deficits, but it is worth noting that the French pension system as a whole absorbs more than 14% of GDP, quite a lot more than in other comparable countries. Much of it comes out of the state budget.

In contrast to the proposed reforms put forward by Alain Juppé’s government in 1995, for which there was hardly any prior consultation with those most directly concerned, there is no doubt that this time the government has fallen over itself to consult as many parties as possible and public debate has been vigorous and encouraged. However, as these consultations have proceeded, under the guidance of the avuncular Pensions Minister, Jean-Paul Delevoye, what looked like a simple solution has turned out to be a lot more complicated and the attempt to merge 42 individual pension schemes into one has hit many obstacles. For a start, to whom should the reformed system apply? To those who are 5, 10 or 15 years from retirement? Or only to those entering the workforce after the reform is adopted, a situation that would be tantamount to no reform at all for the next 40 years or so? What about the pension schemes that have managed themselves quite happily for many years, whose demographic characteristics are favourable and who are likely, under the proposed reform, to lose control over the reserves thy have built up? Is it fair that metro and bus drivers in Paris should be able to retire almost ten years earlier than their colleagues in other large French cities? Is it true that their working conditions are so much worse than those of nurses and doctors, whose jobs can be considered just as demanding and essential for society but who have no particular pension privileges? And on top of the proposals for a systemic reform, other more short-term but constantly recurring questions have also been raised: should the retirement age be raised for all, contributions increased, or existing pension entitlements reduced?  In the face of the number and complexity of such issues and the very different possible outcomes, the government had been criticised for not making its intentions clear, and by the more suspicious in nature (a large majority of French citizens!) for having a hidden agenda! But when all is said and done, the point has now been reached at which it is clear that the crux of the current reform effort is the reshaping of pensions in the public sector and particularly in big public transport companies like the SNCF and the Paris based RATP. And once again, the majority of unions in these and other public sectors have made it clear that they are prepared to bring the country to a standstill to stop the reform. Listening to a union representative on the radio this morning describing what he characterised as appalling working conditions in the Paris metro, I was left wondering why he and so many of his colleagues had not already left their jobs to look for something more congenial. But rightly or wrongly, their determination seems as strong as ever. In this respect at least, nothing has changed since 1995.

And in this conflict, as in so many others between the government and the unions, it is the evolving state of public opinion that will ultimately determine the outcome. For the moment, the attitudes of men and women in the street are inconsistent and contradictory. Some polls indicate that a majority is in favour of a straightforward, one-size-fits-all pension system, but other polls have found that many also have sympathy with those who are presented as, or loudly proclaim themselves as, losers in the process of simplification.  Now that the strike has been called and is likely to be massively observed, any objective assessment of the “facts”, difficult at the best of times, will take second place to a battle of soundbites and images against the background of all too familiar scenes of demonstrations and paralysis. In 1995, one of the reasons the strikers won the day was that Chirac was perceived, correctly as it turned out, as a half-hearted reformer. Macron is of a very different mettle. It is too early to tell whether Michel Rocard’s prediction will once again turn out to be true or whether Emmanuel Macron is the President who will at last break the curse of fundamental structural reform in France and succeed where many others have failed.