As popularity falls, Macron cuts taxes of France’s working class
PARIS — As President Emmanuel Macron presses ahead with the most business-friendly overhaul of the French labor market in decades, his popularity with many of his countrymen has gone into a tailspin. Consumer confidence is falling. A nascent recovery is cooling off. Unemployment has been stuck above 9 percent for months.
And then there was the encounter with the gardener.
In an exchange that went viral on social media, Macron was seen lecturing an out-ofwork gardener in Paris to look harder for a job. “If I crossed the street, I’d find you one,” he told the man, prompting a Twitter storm of insults aimed at Macron, a former investment banker.
That is hardly the vision of France, or of his presidency, that Macron hoped for when he swept into office 18 months ago with a pledge to revitalize Europe’s third-biggest economy by pursuing workforce reforms that had been stalled for more than a decade.
His approval ratings have slumped, and on Wednesday his interior minister resigned, the third Cabinet member to quit in six weeks. Amid the turmoil, the government is trying to shore up support by giving cash back to the working class — with tax breaks next year worth 6 billion euros ($6.9 billion) for middle- and low-income earners — while reassuring investors that his designs for a “new French prosperity” are on track.
Macron remains unbending in his attitude — and his criticism that French society must adapt to thrive. “I will not change course,” Macron told the French newspaper Journal du Dimanche. “We’re in a moment when many political leaders before me have yielded,” he added. “But it’s more necessary than ever to move ahead with reforms.”
His remarks dovetailed with a public relations blitz by some members of his Cabinet in recent days, and underscored the stakes for Macron as he unwinds business regulations and changes the parameters of the welfare state. Macron has insisted that painful economic measures must come first, including a revamping of France’s strict labor code and budget cuts to keep the government’s deficit within European rules, to seed dynamism.
Bruno Le Maire, the finance minister, said abandoning pro-business policies would lead to a “dead end.” The 2019 budget also includes an 18.8 billion euro cut in payroll and other business taxes to encourage hiring and investment.
“But French people are skeptical,” Le Maire told reporters. “We need to explain that this new model will be successful, and that it takes time before seeing the full benefits.”
If convincing French voters is an uphill battle, it is especially challenging for Macron, who is viewed internationally as a dynamic European leader. His policies at home have yet to help most households.
In his first year, he delivered tax breaks to corporations and to France’s wealthiest 10 percent, earning him a reputation for favoring the rich. Purchasing power fell for the bottom 5 percent of households, while the majority in the middle, about 70 percent, were largely unaffected, according to the French Economic Observatory, an independent think tank.
Changes to the labor code intended to stoke hiring have trimmed unemployment slowly. Joblessness has fallen to 9.3 percent, from 10.1 percent when Macron was elected, but is still more than double the German unemployment rate. Although a nascent recovery before he took office helped generate jobs, growth has cooled recently to a 1.7 percent annual pace, as it has in the rest of the eurozone.
Macron promised voters he could whittle unemployment to 7 percent by the next presidential election in 2022. To hit that target, the economy must grow by at least 1.7 percent in each of the next four years, which is by no means certain, according to the French Economic Observatory.
Macron’s economic policies have encouraged companies like Facebook and Fujitsu to increase investments in France. But his style — the confrontation with the gardener is a case in point — has alienated him from working-class voters and older citizens, who view him as out of touch and inclined to favor big business at the expense of workers.
Macron’s 2019 budget tries to make some amends. It pivots toward those left behind in the previous round of tax cuts, targeting 6 billion euros in housing and payroll tax cuts at the working class, on top of reductions in employee health care contributions and unemployment insurance payments. A separate plan would set aside 8 billion euros to tackle rising poverty with aid and job-training programs for disadvantaged youths under 25. The budget is aimed at “making work pay” by leaving more money in workers’ pockets. But to keep the deficit in check, Macron is also trimming benefits for those not working, and cutting over 40,000 jobs in the public sector.
Increases in pensions and family benefits would be capped at 0.3 percent a year, well below the 1.8 percent annual average inflation rate. Although 300,000 pensioners who make less than 1,200 euros a month will be exempted, many older voters are angry about those cuts and are taking to the streets in protest. There are 15 million pensioners in France, and 3 out of 4 voted for Macron in the second round of balloting.
The government will also tighten unemployment insurance eligibility and reshape professional training programs to push the jobless into work more quickly. Despite high unemployment, nearly 330,000 jobs are unfilled as employers scramble to find programmers, drivers and other skilled workers.