The New York Times, August 24, 2013
A
Proud Nation Ponders How to Halt Its Slow Decline
By Steven Erlanger
PARIS — For decades, Europeans have agonized over the power and role of
Germany — the so-called German question — given its importance to European
stability and prosperity.
Today, however, Europe is talking about “the French question”: can the
Socialist government of President François Hollande pull France out of its slow
decline and prevent it from slipping permanently into Europe’s second tier?
At stake is whether a social democratic system that for decades prided
itself on being the model for providing a stable and high standard of living
for its citizens can survive the combination of globalization, an aging
population and the acute fiscal shocks of recent years.
Those close to Mr. Hollande say that he is largely aware of what must be
done to cut government spending and reduce regulations weighing down the
economy, and is carefully gauging the political winds. But what appears to be
missing is the will; France’s friends, Germany in particular, fear that Mr.
Hollande may simply lack the political courage to confront his allies and make
the necessary decisions.
Changing any country is difficult. But the challenge in France seems
especially hard, in part because of the nation’s amour-propre and self-image as
a European leader and global power, and in part because French life is so
comfortable for many and the day of reckoning still seems far enough away,
especially to the country’s small but powerful unions.
The turning of the business cycle could actually be a further impediment in
that sense, because as the European economy slowly mends, the French temptation
will be to hope that modest economic growth will again mask, like a
tranquilizer, the underlying problems.
The French are justifiably proud of their social model. Health care and
pensions are good, many French retire at 60 or younger, five or six weeks of
vacation every summer is the norm, and workers with full-time jobs have a
35-hour week and significant protections against layoffs and firings.
But in a more competitive world economy, the question is not whether the
French social model is a good one, but whether the French can continue to
afford it. Based on current trends, the answer is clearly no, not without
significant structural changes — in pensions, in taxes, in social benefits, in
work rules and in expectations.
But Mr. Hollande’s Socialist Party and the harder French left have not
seemed to grasp the famous insight of the prince’s nephew in Giuseppe Tomasi di
Lampedusa’s renowned novel of social upheaval, “The Leopard,” that “everything
needs to change, so everything can stay the same.” Sometimes, talking to French
politicians and workers, one has the feeling that they all consider themselves
communards and revolutionaries, fighters on the left — but at the same time,
like the far right, they wish to lock into place the comfort of the known.
In May 1968, students at the University of Paris in Nanterre began what
they thought was a revolution. French students in neckties and bobby socks
threw cobblestones at the police and demanded that the sclerotic postwar system
must change.
Today, at Nanterre, students worried about finding jobs and losing state
benefits are demanding that nothing change at all. For Raphaël Glucksmann, who
led his own first strike in high school in 1995, members of his generation have
nostalgia for their rebellious fathers but no stomach for a fight in hard
economic times.
“The young people march now to reject all reforms,” he said. “We see no
alternatives. We’re a generation without bearings.”
The Socialists have become a conservative party, desperately trying to
preserve the victories of the last century. Many in the party, like the
anti-globalization campaigner Arnaud Montebourg, now the minister in charge of industrial renewal — let alone those
further to the left — seem to believe that France would be fine if only the
rest of the world would just disappear, or at least work a little less hard.
There is nonetheless an underlying understanding that there will be little
lasting gain without structural changes to the state-heavy French economy. The
warning signs are everywhere: French unemployment and youth unemployment are at
record levels; growth is slow compared with Germany, Britain, the United States
or Asia; government spending represents nearly 57 percent of gross domestic
product, the highest in the euro zone, and is 11 percentage points higher than
Germany. The government employs 90 civil servants per 1,000 residents, compared
with 50 in Germany.
Hourly wage costs are high and social spending represents 32 percent of
G.D.P., highest among the industrialized countries; real wage increases outpace
productivity growth; national debt is more than 90 percent of G.D.P.
About 82 percent of the new jobs created last year were temporary
contracts, up from 70 percent only five years ago, not the kind of full-time
work that opens the door to the French middle class. That keeps nearly an
entire generation living precariously, no matter how hard people study or work.
Last year, France was ranked 28th out of the 60 most competitive economies
in the world, according to the International Institute
for Management Development in Lausanne, Switzerland. The
United States was first. Even China, at 21, and Japan, at 24, outranked France.
In the World Bank’s ranking of “ease of doing business,” France ranks 34th, compared with 7th for Britain and 20th for Germany.
In Amiens, in the north of France, Goodyear owns two tire
factories. The work force at one has grudgingly accepted a change in work schedules,
preserving its factory. The workers at the other have refused, and Goodyear is
trying (not so easy in France) to shut it down, throwing more people out of
work. Claude Dimoff, a former union leader at the more flexible plant, said:
“I’m part of a generation that experienced the common program of the left. We
had visions for the future, and different values, but all this is forgotten.
The left has completely deviated from its promises.”
The country retains plenty of strengths. France is the world’s
fifth-largest economy, with strong traditions in management, science and
innovation. The gap between rich and poor is narrower in France than in most
Western countries, although it is growing.
When the French work, they work hard; labor productivity, perhaps the
single most important indicator of an economy’s potential, is still relatively
high, if dropping. But with long holidays and the 35-hour week, the French work
fewer hours than most competitors, putting an extra strain on corporations and
the economy.
Large French companies compete globally; there are more French companies in
the Fortune 500 than any other European country. But the bulk of their
employees are abroad, and there are few of the midsize companies that are the
backbone of Germany. Ninety percent of French companies have 10 or fewer
employees and fear expansion because of extra tax burdens and strict labor
regulations.
Even in France’s justly famous agricultural sector, the shrinking number of
farmers has not been matched by a similar reduction in bureaucrats. Jacques
Galaup, a farmer near Gaillac in the southwest, spoke with disdain of the
number of hours he had to spend on paperwork — and estimated that there was
probably one functionary now for every farmer.
Mr. Galaup showed off his records on the fewer than 30 cows that he raises.
The files are thick and all done by hand; computers have barely made it to most
levels of government.
In poll after poll, the French insist that they want renovation and
modernization, so long as it does not touch them. That is always the political
challenge, and Mr. Hollande’s conservative predecessor, Nicolas Sarkozy, is
considered to have failed in his promise to make serious structural changes.
While complaining constantly, for example, about the horrors of the 35-hour
workweek, Mr. Sarkozy never dumped it, but simply played with the tax
consequences of overtime, a change that Mr. Hollande immediately revoked. One
of Mr. Sarkozy’s advisers, Alain Minc, who tried to get him interested in
Germany’s social market revisions, once admitted that Mr. Sarkozy was simply
afraid to confront the unions and the social uproar that real change would
provoke.
There is a broad consensus that real social and structural renovation can
be carried out only by the left. But that can happen only if Mr. Hollande, who
has a legislative majority, is willing to confront his own party in the name of
the future, as the former German chancellor Gerhard Schröder did a decade ago
with a series of legal modifications that now get much of the credit for
Germany’s revival.
Mr. Hollande says he believes in “dialogue with social partners,” which has
so far produced relative peace but little substantive change. With centrist
union agreement, he has slightly loosened the labor market, making flex time
easier and taxing short-term contracts more steeply. And in 2014 he is moving
about $27 billion of social costs from corporations to the regressive
value-added tax.
But what can seem bold in local terms tends to yield minor results, and
these modest efforts have taken place at the height of Mr. Hollande’s power,
which is inevitably declining.
In his book “The Resistance: The French Fight Against the Nazis,” Matthew
Cobb quotes a man named Boris Vildé, executed by the Nazis. His last words
were: “I love France. I love this beautiful country. Yes, I know it can be
small-minded, selfish, politically rotten and a victim of its old glory, but
with all these faults it remains enormously human and will not sacrifice its
stature.”
But by refusing to grapple with its underlying faults, many here say, that
is exactly what it is doing.
This article has been revised to reflect the following correction:
Correction: September 1, 2013
The Memo From France article last Sunday, about efforts by France’s
Socialist president, François Hollande, to stop his country’s slow decline and
prevent it from slipping permanently into Europe’s second tier, misidentified
the character in Giuseppe Tomasi di Lampedusa’s novel of social upheaval, “The
Leopard,” who said that “everything needs to change, so everything can stay the
same.” The character is the nephew of the prince, not the prince.
Les commentaires récents