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France awaits results from Macron’s pro-business push
PARIS, Oct 21, 2018 (BSS/AFP) – Emmanuel Macron has watched his approval
ratings plunge as voters wait for his pro-business reforms to pay off — but
for company leaders like Pierre Loustric, that’s not a problem.
“I’m not disappointed because I know what it takes to move France,” says
Loustric, who expects the lower taxes and eased employment rules pushed
through by Macron to eventually help his fragrance start-up hire more people.
“It’s the same for a business manager: When you want to change your
strategy, it takes a while to see the results,” he adds.
When Macron swept into the presidency in May 2017 vowing to shake France
out of its economic torpor, the jobless rate was stuck at 9.4 percent, well
above the EU average and more than double the rate in Germany.
Nearly 18 months and a series of labour reforms later, unemployment has
eased only marginally to 9.1 percent — while Macron’s approval ratings have
sunk to their lowest to date.
The former investment banker is clearly taking his cue from Germany, where
painful overhauls in the early 2000s paved the way for an economic revival
which led to a huge wave of hiring.
But he has admitted his changes, aimed at freeing companies from a
labyrinth of legal obligations, might not bear results for “about five
years”.
“Lots of companies haven’t yet applied the changes voted through last
spring,” said Jean-Louis Mourier, an economist at Aurel BGC.
Those measures were passed by decree, and parliament is currently pushing
through a host of new changes aimed at simplifying life for business owners
even further.
Key elements include exemptions from audits, work councils and dozens of
other requirements for small firms, and caps on severance pay in case of
contested layoffs — making it less risky for firms to take on workers.
The rules also make it easier for smaller businesses to implement profit-
sharing and grant stock schemes.
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“That would have been interesting for us,” said Loustric, whose company
has developed a technology for diffusing perfumes in homes and offices
without relying on solvents or alcohol.
Since its creation in 2004 Scentys has won over dozens of clients both in
France and abroad, but it only started turning a profit last year.
“It’s not right that the only ones to share the benefits of created value
are executives and investors,” he said.
– ‘Less revolutionary’ –
Yet despite the business community’s backing, Macron may find it harder to
maintain wider support for his pro-business agenda unless French voters start
to see either higher income or more plentiful job offers.
Already his approval ratings have plunged to record lows, with about 30
percent of respondents saying they have a positive view of his presidency.
He faces the added difficulty of pushing through his liberalising business
reforms while also taking often unpopular steps to reduce public spending.
He has promised to cut 120,000 public sector jobs before his term ends in
2022 — but so far he has announced fewer than 10,000.
And unless growth picks up markedly from the 1.6 percent expected this
year, analysts say it’s unlikely he’ll be able to meet his campaign pledge of
a balanced budget — the projected gap between state outlays and income for
2019 still stands at around 100 billion euros.
“They’ve said they will cut the deficit while also cutting spending, but
that hasn’t really been the case,” said Mourier, calling Macron’s programme
so far “a bit less revolutionary than we were told”.
Complicating the economic calculus are looming European Parliament
elections next May, where Macron hopes to lead the charge against a populist
surge that rails against further cutbacks.
A setback for his pro-Europe centrist alliance could rekindle popular
opposition to further belt-tightening or policies seen as favouring firms
over voters’ spending power, some analysts believe.
Business lobbies, meanwhile, remain adamant that payroll taxes and other
social charges are still prohibitively high in France, reaching as high as 45
percent of an employee’s salary.
“For now, corporate leaders have not felt any loosening of the fiscal vice
that is smothering them,” the CPME federation of small-business owners said
in response to Macron’s 2019 budget plan last month.
But even so, many executives credit Macron with helping promote a vision
of France as a more entrepreneurial country that embraces innovation and the
private sector.
“You have to change mentalities,” Loustric said.
“The most important thing was to show people that France needed to be
reformed.”
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