This is how the country has benefited from Macron’s reform agenda

Paris More than a million people on the streets, more than 400 injured police officers, burning barricades: the protests against Emmanuel Macron’s pension reform are becoming increasingly intense. A state visit by British King Charles III planned for next week. in Paris, Macron canceled in view of the unrest. Instead of royal splendor, the tenth nationwide day of protest awaits him on Tuesday.

In a poll for news channel CNews, 58 percent said they were “very angry” about Macron’s economic and social policies. Another 25 percent said they were at least “a little bit angry”. In another poll, the president’s popularity dropped to 28 percent.

However, the resentment stands in clear contrast to the economic situation in France, because the country is doing comparatively well. The gross domestic product (GDP) is growing faster than in Germany and the unemployment rate is at its lowest level for 15 years. Economists attribute this primarily to the president’s reform agenda.

“I believe that the good economic development in France in recent years is largely due to Macron’s will to reform,” says Armin Steinbach, professor at the Paris University of Economics and Business. Despite the crisis, France’s gross domestic product (GDP) grew by 2.6 percent last year, while Germany’s economy grew by just 1.9 percent.

For 2023, the Organization for Economic Cooperation and Development (OECD) expects the French economy to grow by 0.7 percent. The OECD predicts growth of 0.3 percent for Germany this year.

>> Read also: Only five industrialized countries are growing more slowly than Germany

In his first term, Macron reformed the labor market and lowered corporate taxes. This has also made France more attractive as a location for international companies: the state foreign trade agency Business France registered a good 1,700 projects by foreign investors in 2022, a record number.

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Only: many French have the impression that the positive macroeconomic indicators have nothing to do with their everyday life. Macron knows that too: “There is a feeling of injustice,” he tried to explain in a television interview the resistance to his reform.

The President then spoke about the high profits of corporations that had been used for share buybacks. Macron now wants employees to have a greater share of the profits.

Macron in a TV interview

“A lot of the anger has nothing to do with pensions.”

(Photo: dpa)

It was initially unclear how this was to be done in concrete terms. Macron said his government would work on an “extraordinary levy on extraordinary profits” from big companies.

Since Macron took office in May 2017, the unemployment rate has fallen from 9.5 percent to 7.2 percent in the fourth quarter of 2022. Under his predecessor François Hollande, the fight against unemployment was still the central social issue, but now France is more worried about a shortage of skilled workers – too if high youth unemployment remains a problem.

The “drastic decline” in unemployment can be attributed to Macron, says Lisa Thomas-Darbois from the Paris think tank Institut Montaigne. It gave small and medium-sized companies in particular more flexibility when hiring new employees. In contrast to his predecessors, Macron’s goal of full employment is no longer unrealistic, says the economic expert.

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The President has also improved the situation of the young population by upgrading dual vocational training based on the German model. “Last year we had more trainees than ever before,” says Thomas-Darbois. According to the French Ministry of Labour, more than 800,000 new apprenticeship contracts were signed in 2022, a 14 percent increase on the previous year.

Billions for social measures in the crisis

Aid in times of crisis was also plentiful, not least thanks to a generous cap on energy prices. France introduced a brake on electricity and gas prices very early on, says economist Steinbach, and thus quickly fought inflation. There was also targeted support for lower income brackets.

Vincent Mortier and Didier Borowski of the Amundi investment fund write in an analysis that the French energy price cap “has proved very effective in curbing inflation, leaving French households better off than those in neighboring countries”. At 5.2 percent, the French inflation rate was among the lowest in the EU last year. In Germany it was 6.9 percent.

According to a study by the French economic research institute OFCE, during Macron’s first term in office, the purchasing power of households increased by an average of 294 euros per year – significantly more than under his two predecessors, François Hollande and Nicolas Sarkozy. Middle-income groups in particular would have benefited.

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According to the national statistics office Insee, purchasing power remained stable in 2022 despite high inflation. A number of measures taken by Macron’s government are responsible for this – from raising the minimum wage to increasing pensions and social benefits to the abolition of broadcasting fees.

Steinbach also cites the opportunity created by Macron for companies to be able to pay their employees a tax and duty-free purchasing power bonus. “Germany then copied that,” he says.

National debt has increased significantly

Montaigne expert Thomas-Darbois points out that not only companies but also households have benefited from lower taxes in recent years. Overall, the tax burden in Macron’s first term was reduced by almost 50 billion euros. However, the combination of tax cuts and high spending in the corona and energy crisis has led to an increase in public debt, which is now more than 110 percent of GDP.

According to the budget plans, Macron’s government should again have a deficit of five percent of GDP this year, and the deficit should not be below three percent again until 2027. That is the requirement of the Maastricht criteria. Steinbach says that Macron has little other choice in terms of fiscal policy than raising the statutory retirement age: “The demographic problem is rolling towards France just like other aging societies.” France has a slightly higher birth rate than Germany – but there is a risk of imbalances in the pension system even there.

More: Interviewed by Macron: Didn’t make the need for pension reform clear enough

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