Emmanuel Macron’s reforms are long overdue

Emmanuel Macron’s reforms are long overdue

New employment proposals will bring France back into the European mainstream

Emmanuel Macron won the French presidency on an avowedly pro-Europe, pro-business platform, destroying the Socialist opposition and splitting the French right. But political disruption on this scale rarely leads to consensus. And as Mr Macron’s proposed reforms began to take shape, his poll numbers dropped precipitously. French business leaders, however, remain in a positive mood.

This makes sense: for many years, they were confronted on both left and right with elected officials who had no experience outside public service. The new president’s predecessor, François Hollande, made it to the Elysée on the back of the slogan “finance is my enemy”.

Mr Macron, by contrast, is familiar with private enterprise. He understands complex financial mechanisms, speaks good English and is adept with new technologies. Nevertheless, while they are more upbeat than at any time in recent memory, business leaders retain a dose of native caution: they have been burnt before by governments promising far-reaching reform, and the French system is powerful, ponderous and slow to change.

Among the many reforms mooted during Mr Macron’s victorious campaign, two are decisive and would help to convince the world that the government means, well, business: labour market reform and a new budget.

The reform of employment law, details of which were unveiled on Thursday by Edouard Philippe, the prime minister, is both an economic imperative and a political test. France’s structurally high unemployment, stuck well above levels in neighbouring countries for decades, is due to an overly rigid labour market.

Mr Hollande’s government belatedly tried to do something about it, but ran into a brick wall of union and popular opposition. Mr Macron was always determined to act early. The warm glow of victory in the spring has not worn off completely

 Though he is aware that he will face opposition, two of France’s three largest trade unions, the Confédération Française Démocratique du Travail and Force Ouvrière, have given the reforms their tacit backing. He is also conscious of the dictum of former Canadian prime minister Jean Chrétien: “If you retreat on a steep slope, you fall.” Through the summer, early talks between the various parties (including employers’ organisations and the unions) raised hopes of real and substantive reform.

The resulting decrees, presented by Mr Philippe, constitute a balanced package and represent an important step that should put France back in the mainstream of European labour legislation, and encourage employers to ramp up hiring. The new budget is a tougher proposition: the government is committed to meeting its EU obligations on the size of the public deficit, a courageous pledge coming from the continent’s highest-spending country. Doing so is essential if it is to achieve the credibility required to receive German support and boost growth in Europe.

Significantly, France’s Mitterrand-era wealth tax has finally been whittled down to a mere property and landowning tax. Savings and investments tax has been similarly pared back. But shrinking the budget deficit means either making unpopular cuts or giving in to the national temptation of devising new taxes.

Businesses will keep a watchful eye on this. Any growth strategy must be focused on competitiveness and investment. This means lowering the cost of doing business, and, as any insurer will stress, never losing sight of the necessary priorities — creating the most favourable conditions for the long-term financing of the wider economy, such as life insurance provides, to support growth for both existing businesses and start-ups in the new digital economy. In the past three months, the French economy, long derided as sclerotic, has started attracting investor interest around the world.

Mr Macron’s proactive diplomacy on the world stage has been well-received, both at home and abroad. Young people especially are re-energised, and ready to use their talents in their own country at the very moment that many of them feel they are being pushed out of the UK by Brexit.

The question arises irresistibly: did Britain bail out of Europe just as the EU was finding its post-populist second wind?

The writer is the president of the French Federation of Insurers and international and European affairs president of Medef, the French employers’ organisation

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