France: At Crossroads?
Strike? In France? Isn’t France supposed to be a capitalist country? (Did I take some of our communist friends from Calcutta with me?) I had the same perception of France when I left India a month ago. I have been trying to understand French politics, its people and a bit of its history, and I am surprised that France has at all been capitalist. The people and successive governments in France have adopted socialistic policies. Unions in France are very strong; the right to strike, vacation, pension and social security are almost sacrosanct. Privatisation is a bad word, and people really don’t trust corporations. Perhaps the only thing capitalistic about France is that it recognizes the right to private property.
The French economy isn’t doing too well, and there are reasons for that. European integration has lead to free movement of goods, capital and people. Capital has migrated out of France in search of lower wages, people have moved into France in search of higher wages and goods have found higher prices. Unemployment and illegal immigration are just the tip of the iceberg of French problems. In order to solve the unemployment issue, France had adopted a rather, ahem, “interesting” policy of mandatory 35-hour work weeks for all employees in France. (While some employment was created in the process, the labour bills of many French companies shot up and they are struggling to be competitive today). Economic growth has been sluggish (hovering around 2%) and inflation is up, especially since the introduction of Euro in France.
France pays great retirement benefits to all employees, which are taken out of the taxes collected annually (France doesn’t have a pension fund). With an aging populace, fewer people are working every year (to pay taxes) while more number of people get added to the retired list (to enjoy pension and retirement benefits). To add to its woes, France also has one of the earliest retirement ages in all of Europe, and also allows earlier retirement (than the retirement age) in many jobs. This allows some people to pay taxes for fewer years than period of their retirement benefits. The retirement benefits have led to some fiscal disarray. To further complicate matters, taxation is a taboo subject in French politics. Being a part (rather a founder) of the European Union, France is obliged to exercise fiscal discipline, keeping its fiscal deficit under control. France needs to cut down its spending on retirement benefits.
Against this backdrop, the last elections in France were held. Nicholas Sarkozy, the current president of France won the elections with a slogan of “Rupture”, which was telling the people that we need to change our ways drastically, if we wish to grow. Any person would be forgiven for saying that Sarkozy could not have won the election. Sarkozy is the son of an Hungarian immigrant and his promises included taking away benefits rather than extending benefits to the people. Sarkozy promised sweeping reforms and gave slogans like “Work more to earn more” to the vacation-loving French. However, Sarkozy had proved his mettle as interior minister during the riots that raged through Paris last year. More surprising than his victory was the popularity- ratings that he enjoyed after the polls. Sarkozy had effectively managed to get the people of France to agree in principle that change was needed in the way things had traditionally been done in France, which by itself was no small achievement.
Sarkozy, along with his labour minister Xavier Bertrand have started trying to implement their promises, and the first task they took on was taking away the early retirement option extended to rail employees, firemen and electricity workers in France. This has led to the strike with which I began my blog. This is the first crisis for Sarkozy, and for the first time in ages, there has been an unpopular strike in France. How things shape up after this may decide the future course of French politics for years to come
I had the option of skipping my classes, but one of the reasons I chose to walk to my institute was to show solidarity with Nicholas Sarkozy, for I believe he is a man who can set things right in France. I’ll be leaving France in December, but it is always great to see a politician strive hard and stick to his guns for what he believes is right for the country. I hope some Indian politicians are learning something.