Macron’s war on welfare
Macron is now a disconnected leader of a divided and discontented republic.
France is in chaos.
For the last five years, the land of wine, cheese, and chateau, has dominated headlines for all the wrong reasons: a series of terror attacks, the yearlong Gilets Jaunes (yellow vests) mobilization and now the longest transport strike in over two decades that has crippled Île-de-France (greater Paris region) amid growing social discontent and police brutality against protestors. Scores of anti-Semitic attacks are forcing the Jewish community to flee France, raising questions against the governance of 42-year-old Emmanuel Macron who was elected in 2017 as the youngest French President.
The crises the young President has presided over since his dramatic election have come in the middle of Brexit and the imminent departure of Angela Merkel from German leadership, raising deep concerns for the French welfare state and the so-called ‘French Model’.
Macronian Model
A former investment banker and economy minister, Emmanuel Macron took over power from François Hollande who had become deeply unpopular in the last few months of his Presidency. Though Hollande had battled the extreme-right to legalise same-sex marriage and cautiously pursued labour and pension reforms, the neoliberal order didn’t find him bold enough for their taste. Pushed to the wall by a conservative press that painted him as inefficient, Hollande suffered a precipitous decline in approval ratings. The subsequent terrorist attacks in Paris during 2015 and a year later in Nice meant his days in Champs-Élysées were numbered.
Macron’s victory over the extreme-right Marine La Penn in 2017 was seen by many voters as picking the lesser evil between Fascism and Neoliberalism. Fashioning himself a centrist, Macron promised to reform France and — true to his words — launched the first wave of reforms soon after taking power. These reforms spread from administration to labour market. In their wake, hundreds of Mayors were forced to resign. But it were the proposed changes in French labour code which aimed to liberalise the standard employment relationships that provoked the first controversy of Macron’s administration. The 2017 reforms introduced French-style flexicurity and increased the competitiveness of businesses by giving them greater flexibility to hire and fire their staff.
Monsieur Macron: The Reform Champion?
As Macron and Prime Minister Edouard Philippe took successive steps to dismantle the French welfare state, they both underestimated and undermined the extent of resistance in their way. Macron’s tax reforms have been accused of under-taxing the rich and elite ‘Macronites’. In its exhaustive study, Paris-based think tank OFCE found that the biggest losers of these tax exemptions are the poorest 15% of French households who will see their standard of living reduced. In September 2017, France notoriously reformed the impôt de solidarité sur la fortune (solidarity tax on wealth) to exclude investments benefiting its wealthy class. The 2018 Budget act introduced a 30% flat-rate levy on capital revenues which benefit the richest. But it was the fuel tax that triggered a nationwide people’s movement in November of 2018, capturing the economic and class anxiety among the lower-middle class. The movement which came to be known as “Yellow Vests” (after the fluorescent jackets motorists carry in their vehicles) became the epitome of frustration and resentment among the French working-class forced to live on the margins of working poverty. French geographer Christophe Guilluy has termed this growing divide and downgrading of the middle classes as “la France périphérique” (peripheral France).
Today, the ‘Yellow Vests’ movement continues its resistance after a year of waving the French flag and singing “La Marseillaise”. Gilets Jaunes protests have also faced extreme police brutality as French Police resorted to targeting citizens using rubber bullets. Macron’s own former bodyguard was dismissed after facing criminal charges for assault and impersonating a police officer following the attack at a May Day demonstration. Subsequently, Macron launched a “Great National Debate” in town halls across the country culminating with a pledge to lower income tax in Europe’s most-taxed country but it failed to stop the rising tide of protests.
And yet, just as Mouvement des gilets jaunes began to lose steam, Macron wasted no time in re-launching the second wave of reforms with the pension reform bill. The pension system is a major component of the French social contract. Macron’s pension reform is an extension of Sarkozy’s reform in 2010. The controversial bill reflects Macron’s neoliberal disdain for social protection and limits the role of social dialogue in economic governance. The French expenditure on old-age pensions was equivalent to 12.2% of GDP in 2017. Though the number is higher than the EU-28 average of 9.7%, it has ensured that only 8.4% of those 65 years or over are at-risk-of-poverty rate in France compared to almost 16% in EU-28 and over 18% in Germany. The pension reforms replace France’s forty-two pension schemes into a single “universal” points-based system. The government aims to roll out the new system by the end of this year. These pension reforms not only cut benefits for millions but will also bring down the standard of living of French pensioners.
A Schröderian fallacy
The resistance to pension reforms has brought together the entire working class. It has seen students, lawyers, firefighters, airline pilots, doctors, and self-employed professions join hands together as France witnessed its longest transport strike since 1986. Despite the fact that the entire transport system has been shut down and massive protests seen on French streets, Macron has declared no intention to back down. This Macronian arrogance has full support from the global neoliberal media network that has ensured minimal coverage, at best, of French protests.
Many in media have compared the ongoing strike against pension reforms to UK’s miners’ strike of 1984–1985, drawing parallels between the strategy of Macron and Margaret Thatcher. However, such a comparison is embedded in a flawed and limited understanding. The ‘Macronian strategy’ is more akin to that of Germany’s Gerhard Schröder who launched the notorious ‘Hartz Reforms’ during 2003–2005. While Germany was able to drastically reduce its unemployment rate, it created one of the largest low-wage sectors in the EU, an achievement that France would do well to avoid. The Hartz Reforms were based on the recommendations of former Volkswagen personnel boss Peter Hartz. It has been alleged that US asset manager Blackrock is influencing the French government over the ongoing retirement system reform to impose privately-funded pension schemes in France. Blackrock, with close to $7 trillion in funds, has substantially expanded its presence in Paris under Macron. The recent awarding of France’s highest honour to the local Blackrock boss further underscores the intimate relationship between Macron and this financial leviathan. Macron’s hasty pension reforms, based on “flawed financial projections” creates a class-based pension system that will push working-class pensioners towards the risk of poverty.
Will French Welfare survive Macron?
Halfway through his five-year tenure, Macron has been successful in his endeavours to dismantle the French Model as we know. In terms of social protection, France is bracketed as a conservative welfare state. The neoliberal cure for the “statist” French model and underlying social protection is justified as the only recourse out of degrading public finance and a high unemployment rate. This reaffirms the French fascination with the “successful” German-style reforms to sync social progress with competitiveness. In days to come, Macron is expected to take steps targeting the upper-middle classes as a priority. These include abolishing the housing tax (to benefit around 80% of households) and reduction in income tax that Macron announced after the “grand debate” in response to the feeling of “fiscal injustice”.
Macron seems to be stuck in a bubble and is using the camouflage of reform to disrupt the French welfare state. The retrenchment of the welfare state and the introduction of “new flexibility” is crucial to his scheme. Crushing transport trade unions and humiliating the social movement remains his prime agenda. The already weakened trade unions may never recover from this latest blow. Macron’s final aim is to convert the French unemployed into working poor who can feed the growing demand for cheap labour in the part-time work dominated services sector. The agenda of liberalisation has been justified under the garb of a “much-needed reform”.
This push towards economic uncertainty and economic decline is good news for the French extreme-right led by Marine Le Pen. We have witnessed how the American ‘rust belt’ emerged as Trump’s cheerleaders. We have seen how fear of immigration fuelled Brexit in the UK. Le Pen has already announced her plans to challenge Macron in 2022 as France continues to experience a sharp rise in inequality and slower growth. The share of wealth held by the richest 1% has been increasing continuously since the mid-1980s. French citizens with migrant backgrounds remain at the margins of their country’s labour market. As of now, President Macron seems confident of re-election as long as the extreme-right remains his main opposition. But Macron’s own policies will have a long-term negative impact against both the French society and economy. The way ahead for France should be to recognize the strength of social dialogue and widening access to its labour market.
There is no alternative… Yet!
France and its unique economic model that achieved innovation and well-being of its public alongside an excellent health care system and economic egalitarianism must be safeguarded. France needs reforms but not the ones that breed economic precarity. France will do better by cutting on government wastefulness and the abuse of state resources by its elite. The issue of widespread discrimination in hiring minorities is a major labour market barrier that needs to be fixed.
Macron is now a disconnected leader of a divided and discontented republic. His economic governance is aggravating social injustice. It is unlikely that Emmanuel Macron will slow down his war on core elements of French welfare. A President living in a luxurious palace and preaching welfare system as “wasteful” while sitting behind a golden desk is something that calls for reform. What France needs is real action to change the lives of its worst-off. The prime casualty of Macron’s war on welfare will be social justice. Over 600 homeless people died in France in 2018. While 65% of French live in an owner-occupied dwelling, the share falls to just 30% for at-risk-of-poverty households (compared to almost 50% in EU-28).
Macron is no champion of European cause and threatens the pursuit of the European Social Model based on social justice and solidarity. France needs a credible alternative to Macron for the 2022 elections. Eurosceptics like Marine Le Pen can’t be one. The upcoming municipal elections in March will serve as an opportunity for the French Left, including French Communist and Socialist Party, to reclaim their lost political significance and bring the focus back to social democracy. They must project themselves as guardians of the French Model and the republic for which it stands.
(The article was written during a research visit to DIW Berlin. The writer is thankful to @KantPrakhar for his valuable feedback on the draft).
