France’s Emmanuel Macron Announces ‘Act II’ of his Presidency

“When we pass reforms we have to go through death valley,” said France’s Emmanuel Macron earlier this month. A frank take – if a little melodramatic – on his government’s woes of late. Given the size and ferocity of the protests that plagued his administration last year – the so-called gilets jaunes movement – the youthful president can be forgiven a little hyperbole. That public anger seems to have subsided now though, and he is set to dabble in reform once more. Announcing ‘Act II’ of his presidency, Macron will turn his focus to three key areas: the public sector, unemployment benefits, and pensions. His popularity is rising, but critics question whether he’s got the support to martial such sweeping changes. 

Prior to his first wave of reforms, enacted soon after he took office, Macron enjoyed near unprecedented popularity. But his efforts to liberalise France’s regulation-choked economy sparked dissent among the masses. Donning their now-famous yellow vests, upwards of 300,000 took to the streets in late 2018 – and as economic protest morphed into a wider anti-establishment movement, a bitterness descended. Some eleven deaths were linked to the demonstrations, with dozens more seriously injured. 

Macron’s personal approval rating nose-dived amid the violence, forcing him to embark upon a ‘great debate’ – a dialogue-driven tour of town halls across France. It was a seemingly deft move by the president, with his popularity scores now where they were prior to the gilets jaunes phenomenon (around 32%). The protests have diminished significantly too, with scarcely 15,000 continuing to gather. The time is right for a policy shakeup, it seems. 

The public sector is the first target in Macron’s crosshairs. Already he has legislation moving through parliament with the intent of modernising the sector’s management framework. France boasts some 5.5m public servants, most of whose career progression is dictated by committees under the sway of trade unions. The reforms would give public sector managers greater leeway when recruiting from the private sector – and would diminish the role of committees. Prosaic as they sound, the changes mark a “very radical” shift says Ross McInnes, who – as chairman of aeronautical giant Safran – chaired an official public sector efficiency inquiry last year.    

Secondly, Mr Macron will turn his guns on France’s notoriously generous unemployment benefit. Were an average earner to lose their job in, say, Toulouse, they could expect 68% of their previous income in state handouts, according to OECD data. In Hamburg that would be 59%, and in London or Manchester just 34%. This needs to change, says Macron, who intends to taper payments and scale back benefits for high earners. 

“Social justice means making sure it pays to work,” proclaimed his prime minister, Édouard Philippe – but the reform will likely spark conflict. Negotiations on the proposals have ended in deadlock between unions and employers, and though the typically lower earning gilets jaunes won’t be hit especially hard, the changes are stirring fresh discontent. “We have a reform that is deeply unfair,” said Laurent Berger, leader of France’s CFDT union, adding that “100% of the unemployed” will be affected.

But it’s Mr Macron’s bold plans for state pensions that are likely to cause the most controversy. While promising not to raise the legal retirement age from 62, he will incentivise working longer by offering a higher pension to those willing to delay. The French spend more time in retirement than any other OECD population, and there’s little doubt that post-work payouts weigh heavily on the nation’s laden public spending budget (which accounts for a staggering 56% of GDP).

But pensions are a sensitive topic in France, and already unions are warning the president not to meddle too greatly. The hard-Left CGT industrial alliance has threatened strikes if plans are not revised, warning Macron not to treat their workers’ retirements as “a game of chance”. 

Despite this opposition, the French president will feel he has momentum behind him. His La République En Marche! party (LREM) finished a very close second in last month’s European elections, escaping the decimation suffered by mainstream and centrist parties elsewhere on the continent. Fearful of far-Right advances, Mr Macron managed to hoover up Republican voters by the thousand. 

He’s emboldened by good economic tidings, also. Unemployment is at 8.7% – the lowest in a decade – and investment is at a 12-year high with purchasing power rising too. And with new pledges to accelerate environmental measures – including a ban on all use of non-recycled plastic by the state – and an extension to gay rights with regard medically assisted pregnancy, he looks determined to continue his progressive agenda. 

But the path ahead of Macron is undeniably tricky. The gilets jaunes have, for the present, been pacified, but the new reforms will do little to shake his image as ‘president of the rich’ among France’s blue-collar. Similarly, the unions will not accept the policy changes without a fight, with widespread industrial action a near certainty. This will come as no surprise to Mr Macron, who has in recent times faced down civic revolt and lived to tell the tale. He says he’s learnt his lesson from that chaotic episode – to what extent that’s true will undoubtedly define Act II of his presidency.