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With Popularity Slumping, Macron Tries Tax Cuts for France’s Working Class Macron, With Popularity Slumping, Tries Tax Cuts for France’s Working Class
(about 7 hours later)
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.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.And then there was the encounter with the gardener.
In an exchange that went viral on social media, Mr. Macron was seen as lecturing an out-of-work 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 Mr. Macron, a former investment banker.In an exchange that went viral on social media, Mr. Macron was seen as lecturing an out-of-work 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 Mr. Macron, a former investment banker.
That is hardly the vision of France, or of his presidency, that Mr. Macron hoped for when he swept into office 18 months ago with a pledge to revitalize Europe’s third-biggest economy by pursuing work-force reforms that had been stalled for more than a decade.That is hardly the vision of France, or of his presidency, that Mr. Macron hoped for when he swept into office 18 months ago with a pledge to revitalize Europe’s third-biggest economy by pursuing work-force 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.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.
Mr. Macron remains unbending in his attitude — and his criticism that French society must adapt to thrive. “I will not change course,” Mr. 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.”Mr. Macron remains unbending in his attitude — and his criticism that French society must adapt to thrive. “I will not change course,” Mr. 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 Mr. Macron as he unwinds business regulations and changes the parameters of the welfare state. Mr. 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.His remarks dovetailed with a public relations blitz by some members of his cabinet in recent days, and underscored the stakes for Mr. Macron as he unwinds business regulations and changes the parameters of the welfare state. Mr. 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 reduction in payroll and other business taxes to encourage hiring and investment.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 reduction in payroll and other business taxes to encourage hiring and investment.
“But French people are skeptical,” Mr. Le Maire told reporters last week. “We need to explain that this new model will be successful, and that it takes time before seeing the full benefits.”“But French people are skeptical,” Mr. Le Maire told reporters last week. “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 Mr. Macron, who is viewed internationally as a dynamic European leader. His policies at home have yet to help most households.If convincing French voters is an uphill battle, it is especially challenging for Mr. 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.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 Mr. 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.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 Mr. 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.
Mr. Macron promised voters that he could whittle unemployment to 7 percent by the next presidential election in 2022. To meet that target, the economy would have to 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.Mr. Macron promised voters that he could whittle unemployment to 7 percent by the next presidential election in 2022. To meet that target, the economy would have to 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.
Mr. 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.Mr. 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.
Mr. 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 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 to tackle rising poverty with aid and job-training programs for disadvantaged youths under 25.Mr. 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 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 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, Mr. Macron is also trimming benefits for those not working, and cutting over 40,000 jobs in the public sector.The budget is aimed at “making work pay” by leaving more money in workers’ pockets. But to keep the deficit in check, Mr. 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 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 three out of four voted for Mr. Macron in the second round of balloting.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 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 three out of four voted for Mr. 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.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.
To spur job creation, a new policy aims to increase the number of medium-size businesses in France, which have struggled to grow at the same rate as in neighboring countries. These include cutting corporate social security taxes, and reducing requirements for companies to have union representatives.To spur job creation, a new policy aims to increase the number of medium-size businesses in France, which have struggled to grow at the same rate as in neighboring countries. These include cutting corporate social security taxes, and reducing requirements for companies to have union representatives.
Yet even the business community has been grousing about Mr. Macron’s changes. Some companies are upset about the government’s plans to limit the use of short-term contracts, arguing that the policy ignores the needs of the modern workplace. Employers relied on short-term contracts during the financial crisis. The sort of innovative industry that France now seeks — whether digital or manufacturing-based — needs agile and fluid workers, business groups contend.Yet even the business community has been grousing about Mr. Macron’s changes. Some companies are upset about the government’s plans to limit the use of short-term contracts, arguing that the policy ignores the needs of the modern workplace. Employers relied on short-term contracts during the financial crisis. The sort of innovative industry that France now seeks — whether digital or manufacturing-based — needs agile and fluid workers, business groups contend.
Mr. Macron took pains on a tour of the French Antilles last weekend to appear more down to earth, glad-handing the public and standing in the rain for selfies with smiling crowds. “I’m not perfect. There are things that need to be corrected,” he told the French newspaper Le Monde.Mr. Macron took pains on a tour of the French Antilles last weekend to appear more down to earth, glad-handing the public and standing in the rain for selfies with smiling crowds. “I’m not perfect. There are things that need to be corrected,” he told the French newspaper Le Monde.
He also remains adamant that his approach will benefit younger voters — including the 25-year-old gardener who couldn’t find work. Mr. Macron listened to his complaint that horticulture jobs were hard to find and gave a rapid-fire response: Be flexible.He also remains adamant that his approach will benefit younger voters — including the 25-year-old gardener who couldn’t find work. Mr. Macron listened to his complaint that horticulture jobs were hard to find and gave a rapid-fire response: Be flexible.
“If you’re willing and motivated, in hotels, cafes and restaurants, construction, there’s not a single place I go where they don’t say they’re looking for people. Not one — it’s true!” Mr. Macron told the man.“If you’re willing and motivated, in hotels, cafes and restaurants, construction, there’s not a single place I go where they don’t say they’re looking for people. Not one — it’s true!” Mr. Macron told the man.
As it turns out, the man found work as a bus driver, which Mr. Macron’s supporters said showed that jobs were available.As it turns out, the man found work as a bus driver, which Mr. Macron’s supporters said showed that jobs were available.
The French president is “taking a gamble,” said Éric Heyer, the director of analysis and forecasting at the French Economic Observatory. “By easing taxes on the middle class, he’s trying to get away from this image that he’s ‘president of the rich.’”The French president is “taking a gamble,” said Éric Heyer, the director of analysis and forecasting at the French Economic Observatory. “By easing taxes on the middle class, he’s trying to get away from this image that he’s ‘president of the rich.’”
“The measures will either deepen inequality or help growth,” Mr. Heyer added. “But nothing is guaranteed to be a success, so it is unclear if he will win or lose the bet.”“The measures will either deepen inequality or help growth,” Mr. Heyer added. “But nothing is guaranteed to be a success, so it is unclear if he will win or lose the bet.”