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France’s state sell off is not yet a revolution

France’s state sell off is not yet a revolution

PARIS: One of the key moments in last year’s duel for the French presidency was Emmanuel Macron’s visit to an Amiens factory threatened by job cuts. His rival, Marine Le Pen, was promising to take it under state protection. He chose to confront angry workers and try to persuade them it should no longer be the role of the state to shelter industry from the forces of globalisation.Six months on, the president made a return visit: the factory was hiring again, after being bought by a local entrepreneur who makes chargers for electric vehicles. Mr Macron’s own prospects of pushing through economic reforms to unleash private sector innovation and slim down the state are looking similarly encouraging. Defying the sceptics, Mr Macron has pressed ahead with the labour market reforms that eluded his predecessors. Most companies will be able to negotiate pay and conditions directly with workers and will find it easier to fire and hire. The government has also pushed through tax cuts for individuals and companies that may boost investment. And while these measures have inevitably alienated some of his previous admirers on the left, Mr Macron’s ratings have rebounded. People apparently appreciate the novelty of a president who can make things happen. However, these measures will only pay off if Mr Macron follows through. The labour market reforms need to be complemented, urgently, by an overhaul of unemployment benefits and on-the-job training, to create a system more akin to Nordic style “flexicurity”. Cutting taxes before taking any serious steps to cut public spending or tackle tough issues such as public sector pension reform is something of a gamble: Mr Macron is relying on growth coming through to stay within the eurozone’s deficit rules. France has shareholdings worth some €100bn in 81 companies, in sectors ranging from defence and energy to carmaking and telecoms. It wants to sell around a tenth to raise money for a new innovation fund. A partial sale of stakes in Aéroports de Paris, in the energy group Engie and in a state gaming company seem increasingly likely.