News / Economy

French Companies, Unions Question Hollande's New Vision

French President Francois Hollande addresses a news conference at the Elysee Palace in Paris, Jan. 14, 2014.
French President Francois Hollande addresses a news conference at the Elysee Palace in Paris, Jan. 14, 2014.
Reuters
French business raised doubts on Wednesday over Socialist President Francois Hollande's plan for public spending cuts and structural reform to revive the euro zone's second largest economy.

His allies hailed a new “social democrat” vision for France but unions said they were worried about job cuts to the army of state sector workers and far-left politicians accused him of a sell-out as he moved towards the political center.

Hollande, who has not denied magazine allegations last week of an affair with actress, deflected questions on his personal life at a marathon news conference on Tuesday unveiling plans to find at least 50 billion euros of spending cuts between 2015-2017 and cut corporate charges by 30 billion euros.

The European Commission said the moves should make French business more competitive. While France's main employers' group broadly welcomed the plan, it rejected his call for companies to commit to specific targets for new hires.

“What exactly is the magnitude of the structural reforms he announced? We need to have a clarification,” said Medef president Pierre Gattaz, who has suggested the French private sector could create an extra one million jobs if freed from excessive charges.

Critics say French public spending at around 57 percent of national output - some 12 points more than in neighboring Germany - is too high while the national audit office has said that French debt at 93.4 percent of GDP is “in the danger zone.”

But Hollande's plans prompted an onslaught of criticism from France's hard left and even from the far-right National Front's Marine Le Pen, who said he converted to “ultra-liberal” economics.

“It's called social democracy... and social democracy is on the left,” Finance Minister Pierre Moscovici, a centrist leader in Hollande's Socialist Party, told LCI television.

“What is being proposed is a social compromise... it is an acceleration, an amplification of our line,” he replied when asked if Hollande - who in his 2012 campaign called the world of finance his “enemy” - had committed a U-turn.

Social democracy is the term used to describe the goal of creating welfare structures and social solidarity within a capitalist economy. In Europe, it is employed most notably in Germany in the name of the main party of the left.

But whereas Germany's Social Democrats disavowed Marxism at a 1959 conference in the Rhineland town of Bad Godesberg, France's Socialists have never had such a moment and remain a broad grouping in which centrists rub shoulders with staunch left-wingers such as Industry Minister Arnaud Montebourg.

A spokeswoman for the German Finance Ministry said the proposals were “important” and Berlin had “a great deal of respect for the efforts and reform measures that have been announced.”

“U-turn of words"?

For over two-and-a-half hours on Tuesday, Hollande batted away questions about a celebrity magazine's revelations of a liaison with a French film actress and the future of his relationship with official partner Valerie Trierweiler.

The setpiece event was intended to expand on Hollande's conviction that “supply-side socialism” is needed to reform the euro zone's second largest economy while preserving a generous welfare model cherished by most French.

“A U-turn of words”, the right-leaning Le Figaro newspaper said in its Wednesday edition. “Hollande set free,” the left-wing Liberation daily said.

But while Hollande largely succeeded in ensuring domestic headlines focused on his economic plans rather than private life, the reaction among reform advocates was more mitigated.

The planned cuts to spending amount to some 18 billion euros a year for 2015, 2016, and 2017 - little higher than an existing rhythm set to shave 15 billion euros this year.

Moreover Hollande said the 30-billion-euro tax reduction to companies by alleviating them of the need to pay family benefit contributions by 2017 could be partly counter-financed by re-diverting 20 billion euros of existing tax credits.

“So the net win is only of the order of 10 billion euros whereas we were after 80,” said Gattaz.

Hollande's suggestion that France could find savings by rationalizing its multi-layered system of local government also raised concerns among trade unions over the fate of some 5.3 million “fonctionnaire” public sector workers.

Budget Minister Bernard Cazeneuve said the government would not repeat an attrition policy tried out by conservative ex-leader Nicolas Sarkozy to replace only one out of two departing state sector workers.

However the moderate CFDT union that has backed Hollande's reforms up till now warned in a statement that it would watch closely any impact on staffing levels.

Independent economists welcomed Hollande's recognition of the need to cut spending but questioned whether the volume of cuts will be delivered and sufficient to mark a change.

“2014 could be a window of opportunity for Hollande,” said Christian Schulz, senior economist at German bank Berenberg.

“Convincing the left wing of his party and the unions of the need for supply-side reforms should be easier in times of high unemployment and economic underperformance,” he added.

Germany's conservative Frankfurter Allgemeine Zeitung noted that Hollande had “abandoned the balancing act” within his own party by coming out as a social democrat rather than a left-leaning socialist.

But it added: “In Europe, and especially in Berlin, people will be watching closely to see if he can stay the course with his shift.”

A spokeswoman for the German Finance Ministry said the proposals were “important” and that Germany had “a great deal of respect for the efforts and reform measures that have been announced.”

You May Like

Photogallery Oxfam: Ebola Could Be 'Disaster of Our Generation'

Meanwhile, Fidel Castro, the former leader of Cuba, says the Caribbean island nation will 'gladly cooperate' with the US in the fight against Ebola in West Africa More

Multimedia Kobani Fighting Sends 400,000 Refugees to Turkey

Refugees receive help from Turkish authorities and individuals, but say much more is needed More

India’s Ruling Nationalist Party Makes Gains in Regional Elections

Bharatiya Janata Party’s huge margin over its rivals puts it on course to form governments in the northern Haryana and western Maharashtra states More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Exclusive: American Joins Kurds' Anti-IS Fighti
X
Zana Omer
October 18, 2014 6:37 PM
The United States and other Western nations have expressed alarm about their citizens joining Islamic State forces in Syria and Iraq. In a rare counterpoint to the phenomenon, an American has taken up arms with the militants' Syrian Kurdish opponents. Elizabeth Arrott has more in this exclusive profile by VOA Kurdish reporter Zana Omer in Ras al Ayn, Syria.
Video

Video Exclusive: American Joins Kurds' Anti-IS Fight

The United States and other Western nations have expressed alarm about their citizens joining Islamic State forces in Syria and Iraq. In a rare counterpoint to the phenomenon, an American has taken up arms with the militants' Syrian Kurdish opponents. Elizabeth Arrott has more in this exclusive profile by VOA Kurdish reporter Zana Omer in Ras al Ayn, Syria.
Video

Video South Korea Confronts Violence Within Military Ranks

Every able-bodied South Korean male between 18 and 35 must serve for 21 to 36 months in the country’s armed forces, depending upon the specific branch. For many, service is a rite of passage to manhood. But there are growing concerns that bullying and violence come along with the tradition. Reporter Jason Strother has more from Seoul.
Video

Video Comanche People Maintain Pride in Their Heritage

The Comanche (Indian nation) once were called the “Lords of the Plains,” with an empire that included half the land area of current day Texas, large parts of Oklahoma, New Mexico, Kansas and Colorado.The fierceness and battle prowess of these warriors on horseback delayed the settlement of most of West Texas for four decades. VOA’s Greg Flakus reports from Lawton, Oklahoma, that while their warrior days are over, the 15,000 members of the Comanche Nation remain a proud people.
Video

Video Turkey Campus Attacks Raise Islamic Radicalization Fears

Concerns are growing in Turkey of Islamic radicalization at some universities, after clashes between supporters of the jihadist group Islamic State (IS) or ISIS, and those opposed to the extremists. Pro-jihadist literature is on sale openly on the streets of Istanbul. Critics accuse the government of turning a blind eye to radicalism at home, while Kurds accuse the president of supporting IS - a charge strongly denied. Henry Ridgwell reports from London.
Video

Video Syrian Defector Leaks Shocking Photos of Torture Victims

Shocking photographs purporting to show Syrian torture victims are on display at the U.S. Holocaust Memorial Museum in Washington. The museum says the graphic images are among thousands of photographs recently smuggled out of Syria by a military policeman-turned-defector. As VOA reporter Julie Taboh reports, the museum says the photos provide further evidence of atrocities committed by the government of Syrian President Bashar al-Assad against its own people.
Video

Video Drought-Stricken California Considers Upgrading Water System

A three-year drought in California is causing a water shortage that is being felt on farms and cities throughout the state. As VOA's Mike O’Sullivan reports, water experts, consumers and farmers say California needs to make changes to cope with an uncertain future.
Video

Video TechShop Puts High-tech Dreams Within Reach

Square, a business app and card reader, makes it possible to do credit card transactions through cell phones. But what made Square possible? VOA’s Adrianna Zhang and Enming Liu have the answer.
Video

Video Church for Atheists Goes Global

Atheists, by definition, do not believe in God. So they should have no need of a church. But two years ago, a pair of British stand-up comedians decided to create one. Sanderson Jones and Pippa Evans told the BBC they envisioned “something like church but without God". Their “Sunday Assembly” movement has grown from a single congregation in London to dozens of churches around the world. Reporter Mike Osborne visited with the members of a Sunday Assembly that now meets regularly in Nashville.
Video

Video Robot Locates Unexploded Underwater Mines

Many educators believe that hands-on experience is the best way to learn. Proving that the method works is a project developed by a group of students at the Stevens Institute of Technology, in Hoboken, New Jersey. They rose up to a challenge posted by the U.S. Department of Defense and successfully designed and built an underwater robot for locating submerged unexploded ordnance. VOA’s George Putic reports.
Video

Video Liberia's JFK Hospital Reopens After Temporary Ebola Exposure

JFK Hospital is Liberia’s largest and one of its oldest medical facilities. The hospital had to close temporarily following the deaths of two leading doctors from Ebola. It is now getting back on its feet, with the maternity ward being the first section to reopen. Benno Muchler has more for VOA News from Monrovia.
Video

Video Hong Kong Protests Expose Generation Gap

Most of the tens of thousands of protesters in Hong Kong are students seeking democracy. Idealistic youths say while the older generation worries about the present, they are fighting for the territory's future. VOA's Daniel Schearf reports from Hong Kong.
Video

Video Liberians Living in US Struggle From Afar as Ebola Ravages Homeland

More than 8,000 Liberians live in New York City, more than in any other city outside of Liberia itself. As VOA’s Bernard Shusman reports, with the Ebola virus ravaging their homeland, there is no peace of mind for these New Yorkers.
Video

Video Kurds See War-Ravaged Kobani As Political, Emotional Heartland

Intense fighting is continuing between Islamic State militants -- also known as ISIS or ISIL -- and Kurdish forces around the Syrian town of Kobani, on the Turkish border. The U.S. said it carried out at least nine airstrikes against Islamic State positions Friday. Meanwhile the U.N. has warned that hundreds of civilians would be massacred if the town falls to the militants. Henry Ridgwell looks at the strategic significance of the city.

All About America

AppleAndroid

World Currencies

EUR
USD
0.7798
JPY
USD
106.41
GBP
USD
0.6203
CAD
USD
1.1242
INR
USD
61.430

Rates may not be current.