France’s current crisis – neoliberalism imposed, democracy denied, part 2

Part 2: Brussels opposes France’s democratic mandate

 By Pam Barker | TLB staff writer

An about-turn – the Macron Law 2015

As we saw in part 1, President Francois Hollande had been elected on an explicitly anti-austerity platform by the French in 2012. Greek people, too, had opted for this by electing the Syriza party under Alex Tsipras in early 2015. This amidst the ideological turn toward neoliberalism by the elites after the economic crisis of 2008, where cutting back on public spending and raising taxes were believed to be the answer, wrongly as it turned out, to economies that were depressed, automatically so because of the crisis.

But Hollande’s government did a policy about-turn. Two, in fact.

The first of these was the Loi Macron or Macron Law passed in 2015. Emmanuel Macron is a thirty-eight year old former Rothschild banker who has been the unelected Minister of the Economy in the Hollande government and a graduate of the elite school for the French political class.

The Loi Macron was pushed through the French parliament using executive power last year amidst protests from many sectors of society, including the professions. Its intentions were to increase the liberalisation of the economy in line with neoliberal goals. The contentious law implemented a grab-bag of changes including: extending Sunday shopping laws; opening up access to the professions and destroying their monopoly-like powers; giving 40 billion euros of tax relief to companies; reducing high non-wage labor costs; shortening wait times for the driving test; simplifying labor law disputes; requiring the unemployed to look more actively for work; and offering employees shareholding options.

This piecemeal approach met with approval as an initial first step from the bosses’ union including the European Union Commission in Brussels. But much more was expected.


Emmanuel Macron, Manuel Valls

Pressure from the unelected EU Commission

And that’s the part of the story that is largely missing from most of the reporting on the economic situation and social unrest in France – pressure exerted on the French government from the EU Commission in Brussels, from the Washington-based International Monetary Fund (IMF) and their most ardent cheerleader, Angela Merkel. As we will see, this pressure is quite extreme.

However, these economic measures have not been made without resistance from the French government itself. In a Der Spiegel report from 2014, all three top ministers – the President, Prime Minister Manuel Valls, and Macron did not necessarily see eye-to-eye with Brussels on the need for austerity precisely because of its disastrous consequences for the economy:

The prime minister, the economics minister and the president agree on one thing, though: They are opposed to biting austerity measures, fearing they might plunge France even deeper into recession. Indeed, Paris only plans to bring France’s budget deficit in line with the EU maximum — of 3 percent of gross domestic product — in 2017. The European Commission has admonished the Hollande administration while German Chancellor Angela Merkel has desperately tried to get her flagging neighbor to change course. But to no avail.

Even prior to the passing of the Macron Law in 2015, it was clear that Brussels had been exerting strong pressure on the French government to basically cut its spending where, on the contrary, spending more had originally been planned. In other words, the government had wanted to pursue a stimulus as opposed to austerity course but couldn’t.

So from 2014 over the following three years, the French government had promised Brussels it would make annual cuts totalling 50 billions euros over those three years, and reduce its budget deficit to 3% of GDP by 2015. But the goal of 3% in 12 months being impossible, Paris has been requesting deadline extensions along the way:

The budget predicts that the deficit will be 4.4 per cent this year, 4.3 per cent next year and 3.8 per cent in 2016, finally reaching 2.8 per cent in 2017, meaning that Paris must ask Brussels for the third time for an extension of the deadline.

Further, while the government has been eager to distance itself from the campaigned-against ‘austerity’, its approach clearly is and has been hitting ordinary families:

The spending cuts, which the government insists do not mean “austerity”, will come from 9.6 billion euros of cuts to family allowances, already announced to widespread criticism by Social Affairs Minister Marisol Touraine, a 3.7-billion-euro reduction in central grants to local authorities and a one-billion-euro reduction in central government spending.

In fact, the Hollande government has been under pressure by the EU regarding its economic course from day one, in 2012. The promise for 2013 was to raise taxes and implement spending cuts to save up to 37 billions euros in order to bring down the budget deficit. From 2012, the approach has basically been that of enforced austerity.


Reforming the Labor Code 2016

Which brings us to the latest piece of contentious legislation causing the recent round of nationwide demonstrations – the Loi Khomri named after the Minister of Labor, Myriam El Khomri, which has reformed parts of the Code du Travail or Labor Code, that humungous red book of regulations resembling a doorstop, which is something of a sacred cow in France.

The ostensible reason for reforming the Code du Travail was to bring down the unemployment rate which is standing at around 10% and has been quite static since Hollande took office in 2012. One of his big campaign promises, in fact, was to bring the level of unemployment down.

Last Thursday night, the government survived a no confidence vote, this coming 2 days after Prime Minister Manuel Valls had resorted to executive power, using article 49-3 of the Constitution to push through the Khomri Law.

Significant opposition within Vall’s own socialist party prompted this move, although the vote had been triggered by the centre right Republicans. 50 members of his own party had tried to file their own no confidence motion on Wednesday.

The new law simplifies and renders more flexible certain labor rules, including the decision to fire someone if a company finds itself in economic difficulties. Companies themselves can also strike deals with employees on overtime thus bypassing the unions. The law will still pay workers more for putting in more than the standard 35 hour week, but there is room for manœuvre as to how much more employers must pay.

So basically, employee firing is made easier, unions are shut out of a key negotiating step where individual employees are left alone to make their own negotiations with bosses and managers, and employers will certainly pay as little as they can for overtime hours.  Clearly, individual employees will lack the clout of an organisation behind them under these reforms, leaving them hostage to the whims of their particular employers.  This in a country where, this writer can readily attest, employers have the reputation of finding creative ways to play hardball with individual employees over the slightest thing.  There is never much love lost between the employee and employer classes and for very good reason.


There are also two measures that benefit the employee, one of which is to offer training, an intership or even a job at the cost of 461 euros per month to help the 18-25s who are unemployed and lack training or a high school diploma, which costs the government a lot more in the long run.  However, this is being criticized for putting young people in temporary, precarious jobs.

The bill has been changed several times over the months due to intense opposition. In March, the pro-business measure of putting a cap on severance pay in the case of wrongful dismissal was overturned, but changes such as these have done nothing to gain the support of the majority of the unions nor of the main business organisations, who no longer support the bill.

The Demise of the Left

The death of the political left-wing has been a topic for some years now, with the traditional left having moved steadily to the centre or even the right. This was famously done under Tony Blair in the UK, but Democrats in the US have been some of the best advocates for the corporatocracy with NAFTA (Clinton) and TPP/TTIP (Obama) which have steadily destroyed the domestic jobs market and lowered people’s wages and standard of living. The Affordable Care Act under Obama simply gave the medical insurance companies a bigger client base and in no way represented a move to single-payer universal coverage. Clinton famously signed into law the Gramm-Leach-Bliley Act which repealed some parts of the Glass Steagall Act that had formerly separated investment from commercial banking, freeing up banks to play with citizens’ savings; and Obama has never gone after the de-regulated banks as he promised to during his campaign. Waging wars around the world at vast taxpayer expense has gone on equally under governments of the left and right in the US and UK for a couple of decades to the delight of the military-surveillance complex.

On the big issues that drive everything – economic policy, the banks, and foreign policy and deployment of the military – one elitist agenda continues to play itself out irrespective of the elected party of the day. To the detriment of the citizen. This, of course, has famously been said by commentators such as G. Edward Griffin.

France has just taken a little longer to catch up.

Quoted in the New York Times, a French professor at the prestigious Sciences Po political science institute puts the current French situation into perspective, emphasizing this very theme concerning the left:

“The left has ceased to exist, because it doesn’t represent anything,” said Gérard Grunberg, a professor at the Sciences Po political science institute. “There is not one left now, there are a number of lefts,” said Mr. Grunberg. “The party of Mitterrand,” he said, referring to François Mitterrand, the nimble politician who led the Socialists back into power in 1981 after years in the wilderness, “no longer exists.”

The immediate result was “the madness of yesterday,” as Mr. Grunberg put it — Socialists on the party’s far left attempting to eject a Socialist prime minister. “That was something unbelievable,” Mr. Grunberg said. “We’ve never seen that before. They were voting to overthrow their own government.”

As for the right wing, what the Financial Times calls a ‘lurch to the centre’ by the Hollande government makes opposition from the right-wing to the current bill somewhat hypocritical and odd. The Nobel prize winner Jean Tirole has praised the bill for bringing France closer to the models of the UK and Germany.

Tirole also said that France has ‘chosen unemployment’ because of having chosen institutions that create it.


However, it needs to be noted that since 1959, the start date of the 5th (and current) Republic, only one socialist government had been in power prior to Hollande’s – that of Francois Miterrand, who served two consecutive terms starting in 1981 and ending in 1995. If France has indeed chosen institutions which promote unemployment, it has done so largely under right-of-centre administrations. Ditto for its infamously high taxation rates.

So except for the gay marriage bill Hollande’s government passed under former Justice Minister Christiane Taubira in early 2013, against vehement opposition from the right, its two other major pieces of legislation – the Macron Law and El Khomri Law – have been enough for commentators such as Grunberg above to note that the French left is dead. To what degree, then, can we call this government ‘socialist’? That is of course exactly the point of its critics on the left as well as the French public. Indeed, fifty-eight percent of the public according to an April opinion poll were against the reforms.

Yet Manuel Valls as well as Francois Hollande have been absolutely adamant about pushing through some degree of reform to the labour code despite their own ideological misgivings about austerity reforms, despite public opinion and the violent opposition they could predict would happen.

So what is really going on here?

In part 3, we discover more about the dictates of Brussels and hear from Yanis Varoufakis himself, the former Greek finance minister, who had to deal personally with the EU Commission and the Germans to negotiate the first two bailout loans. Behind the scenes, it is quite ugly and blatant.

End of Part 2

Next: Could France become another Greece?













About the author

TLB image Pam

Pam Barker is a TLB staff writer/analyst based in France. She has an extensive background in the educational systems of several countries at the college and university level as a teacher and administrator.

3 Trackbacks & Pingbacks

  1. France’s current crisis – neoliberalism imposed, democracy denied, part 2 — The Liberty Beacon | Poverty By Design
  2. Update France: strikes and protests intensify, government resists | The Liberty Beacon
  3. Update France: strikes and protests intensify, government resists – Europe Reloaded

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