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What Macron wants, and is he getting it right?

Politico, Jun 21

Emmanuel Macron’s presidency is about to get started, for real this time.

After proving for six weeks that he can stand up to his global peers, the new head of state must do something harder: prove he can reform his country and turn it into a European leader.

Winning the presidency and seizing control of parliament were two giant steps on that path. But Macron knows there is no room for complacency. Abstention in the second round of the parliamentary election on Sunday was the highest in the history of France’s Fifth Republic, which was established in 1958. And populist firebrands Jean-Luc Mélenchon and Marine Le Pen now have seats in parliament from which to assail his agenda.

To avoid getting derailed, Macron has to move quickly. In what may be the only thing he has in common with Donald Trump, Macron does not like being held to a 100-day standard for success — he said in April that he did not believe in the metric. Yet, like Trump did, he also wants his 100 days to be era-defining, and to avoid “the error” of previous presidencies in deferring reforms, he said in May.

Which means acting now. What Macron gets done over the next three months will define his legacy — great reformer, or mere slick PR master. It’s up to him. Here are five key reforms to keep track of, and when to judge if Macron is getting it right.

1. Labour code

Of all Macron’s proposed reforms, overhauling France’s rigid labour code is easily the most explosive.

His predecessor François Hollande’s attempts to reform the code almost certainly cost him a chance at running for re-election. To avoid a similar fate, Macron’s team is proceeding methodically by meeting repeatedly with unions so they feel included; doling out “sweeteners” to keep them onside; and aiming to pass everything in a blitz of executive decrees during the summer.

MPs will start to “debate” the law in early July. But, crucially, they will not be debating actual changes to the labour code but granting the government authority to reform via decree. Discussions will stretch through July (Macron asked MPs to stay on through the summer), with the government aiming to adopt executive decrees — the actual contents of the reform, which has not yet been publicly announced — by September 20. Parliament will then meet to ratify them, sometime in the following three months.

What could go wrong: Confidence between unions and the government could break down. Protests could be planned for September and gather momentum. Mélenchon could lead a massive street movement against the government. Macron’s teams would have to sit down again to re-examine the law’s contents. Further concessions would likely be granted. Decrees could be withdrawn.



When to judge if Macron succeeded: End of September. If Macron’s cabinet adopts executive decrees, and they are as ambitious as trailed (including capping damages for firing, loosening protections for long-term work contracts and enshrining the idea that in-house labour negotiations trump sector-level ones, among other big changes), then unions will struggle to undo what’s been done, and Macron will be on his way to victory. September and October are the most dangerous months.

2. Unemployment benefits and job training

Reforming the dysfunctional, heavily-indebted unemployment benefit system is every bit as explosive as the labour reform.

Macron’s plans involve a near-total rethink. He wants the state to wrest back control over a benefit system currently co-managed, with horrible inefficiency, by unions and business representatives. The system is €33.6 billion in debt, which counts toward the state’s debt load.

Macron wants to open up the system, currently accessible only to employees, to all categories of worker. 

Liberal think tank l’Institut Montaigne estimates the reform would cost some €4.8 billion, which the government wants to offset by tightening access to benefits, reducing their duration and limiting the number of job offers the unemployed can reject. A similarly wasteful job training system would be revamped too.

In both cases, unions are sure to resist. Job training is a €30 billion per year bonanza for them with non-existent oversight. Keeping millions of people on jobless rolls kills competition for union-controlled jobs. Which may explain why the government is cagey about how this will be carried out, except to say the reform will hit the books “sometime before the end of the year,” and that it will be done via debate, not by executive decree.

What could go wrong: If the labour reform bill prompts protests, forget about unemployment benefit reform by year-end. Doing both side-by-side would risk exposing Macron on too many fronts.

When to judge if Macron succeeded: Early October. It will take Macron a few months to prepare legal texts and hold a debate in parliament. If the government wants to overhaul unemployment benefits, it will have to get started by October. If not, the effort will have been quietly postponed.

3. Pensions and labour charges

The details are finicky, but this reform — if carried out — would complete Macron’s grand vision for the French economy. In short, he wants to reduce social charges that currently make French labour costs among the highest in Europe, by slashing contributions for health and unemployment benefits. To offset those costs, he wants to increase a tax known as the CSG (General Social Contribution) on all work and pension income, but especially for the richest 40 percent of pensioners.

It may sound marginal, but in fact it’s a political goldmine for opponents.

Former President Nicolas Sarkozy faced giant protests for trying to raise the retirement age; this could prompt similar pushback. Already, conservatives are touting the pension reform as their best chance of leading a fight against Macron and winning back pensioners ahead of local elections. Marine Le Pen, whose party has struggled to attract support from pensioners, is banging the drum on this as well.

Macron’s team has given few details on how pension reform will be carried out, saying only it should be done “within 12 months.”

What could go wrong: Having spent political capital on the labour and unemployment reforms, Macron could find himself losing popularity. Right- and left-wing opponents of the president could find common cause on this issue. They would make it into a rallying cry heading into local and European elections. Politically, the reform could turn into a liability.

When to judge if Macron succeeded: Next May. If Macron is ploughing ahead with his reforms on schedule and the pension reform is put to parliament by May, he will be on his way to securing an impressive legacy.

4. Making Europe Great Again

If the items above are Macron’s plan to make France great again, this one is about restoring the glory of the Continent.

According to campaign aide-turned-defence minister Sylvie Goulard, the president wants to equip the eurozone with its own budget, parliament and finance minister — and to establish an integrated command structure for European defence initiatives.

While the timetable for implementing this vision stretches out over years, a first step will come this week at the European Council meeting when France puts forward initial steps for the defence partnership. Sometime next year, Macron would invite Germany to start holding “consultations” about the future of the European Union — a bid to seek broader support for the rest of the process, which is only loosely defined.

Macron’s team has yet to spell out when it wants to move ahead with more ambitious plans, including harmonizing tax and welfare regimes. But it’s a safe bet they will wait until after Germany’s election in September, and possibly until after a parliamentary election in Italy, scheduled for next year.

What could go wrong: Germany may not follow Macron’s lead on EU integration. The government in Berlin has already voiced scepticism about some aspects of Macron’s vision.

When to judge if Macron succeeded: Next March. By this time, Macron should have gotten his most controversial domestic reforms out of the way and be on his way to building consensus with Germany on European integration.

5. Making the state of emergency permanent

France’s new president is moving fast to toughen up anti-terrorism laws. One of his first measures in power was to prolong a state of emergency that’s been in place for nearly two years.

Now he wants to go further, by writing powers that come with a state of emergency into regular law. According to a bill revealed by Le Monde, the interior ministry and senior regional officials will be allowed to order suspects to remain within certain geographic areas, and to order raids on their homes by day or by night. Until now, those measures were only allowed under a state of emergency.

In return for incorporating the measures into law, Macron’s office said the state of emergency would lapse after November 1. But lawyers, magistrates and defenders of civil liberties are furious. “This bill is scandalous. It actually goes much further than what’s currently allowed,” Virginie Duval, head of a magistrates’ union, told the JDD weekly paper this week.

What could go wrong: Violations of civil liberties could pile up. Proof that expanded powers prompted police to target minorities in a discriminatory fashion could damage Macron’s image.

When to judge if Macron succeeded: By end-July. Parliament will examine the bill shortly after the cabinet discusses it next week. With an absolute majority behind Macron, the bill is sure to pass.

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