François Hollande: Rejected Before a Year in Office

On 25 April 2013 the French Ministry of Labour posted the latest unemployment figures for March - an increase of 36,900 and the 23rd consecutive monthly increase - which showed that 3.224 million were signed up and looking for work. The Ministry admitted that this figure broke the previous record set in 1997 of 3.195 million and whilst not releasing an unemployment rate, reiterated that this had stood at 10.2 per cent at the beginning of the year and that they are confidant that the rate would not break 1997's 10.8 per cent as there are about three million more workers in the labour force.

The rate must surely be getting fairly close to what appears to be a "this and no further" percentage going by what a slightly put out President Hollande stated in an interview given to France 2 on 28 March. With the Government scrabbling for every euro and having had its 75 per cent "super-tax" on individuals with salaries of more than €1 million knocked back (again) by the Constitutional Court in early January, the President declared that laws were being formed so that companies would now have to pay the 75 per cent tax on such salaries, saying:

"I am sticking to my pledge...My first objective is to reverse the unemployment rate and...(for the 10.6 per cent jobless rate) to start falling (from the end of this year).

"This is not a wish, nor is it a forecast. It's a commitment and a battle. I am the chief of this battle."

President Hollande has used INSEE's (National Institute of Statistics and Economic Studies) figure for the fourth quarter of 2012 and what can only be of much greater concern to the President and his Minister of Labour, Michel Sapin, is that the Institute expects the jobless rate to reach 11 per cent by July 2013. On the same day, France 24 reminded the Head of State: "Promises, promises...François Hollande said that he would stop the unrelenting rise in unemployment..." Though by this time the President, knowing his former pronouncements on such a touchy issue might be used against him, had given himself the breathing space by adding "by the end of 2013".

On a number of measures and policies the Socialist Government's credibility is being severely tested and recent history is not on its side. During the Nineties, 10 per cent unemployment was a norm and the proportion of young people (16 to 25-year olds) out of work often reached 20 per cent. In April 2009, Christine Lagarde, then France's Economy Minister described the jobless data as: "...not catastrophic, but not good news either" with unemployment in the under 25s measuring 21.2 per cent. However, avoiding catastrophe was not what the former Deputy of the National Assembly representing Corrèze's 1st Constituency was elected for. His election campaign had promised so much more and it's a safe bet that the majority of the young unemployed, now probably higher than the end 2012 figure of 25.7 per cent, voted for him to become President.

The structure of the unemployment then is as worrying as the total for the other "sticky" portion of the jobless figure is that of the long-term unemployed. Again, this has been an all too frequent component of the French jobless figure for decades. A headline back in 1993 exclaimed that those out of work had breached three million at just over 10 per cent of the workforce and of this, one million were long-term and had been out of work for more than a year. It is a lot scarier now; the number of long-term unemployed in March 2013 reached the historic high of 1.89 million! That's 58.6 per cent of the total. Piling on more pressure for the Ministry of Labour, is that when the unemployed in France's Overseas Territories - "colonies" of the former French Empire with small populations where Paris still retains much control and responsibility - plus those people presently in part-time employment but who wish to work full-time are taken into account, then the number seeking work rises to five million.

There's a big difference between having the luxury of being in opposition and dealing with the reality of now having the responsibility of government. France's Minister of Productive Recovery, Arnaud Montebourg, has advocated a return to nationalising firms under threat of closure in order to protect jobs. M Montebourg had a big row with steel firm ArcelorMittal, builder of the Orbit in the Olympic Park in Stratford, London, over the firm's wish to close much of its production site at Florange, Lorraine. Back in late November, Andrew Trotman in The Telegraph, reported that M. Montebourg had accused the company of telling "shameful lies" about a proposed redundancy plan, adding that the group was no longer welcome in the country.

Nationalisation will not happen - at least in this instance - but does the French Government really want to take over the running of a plant with two million tonnes of capacity but which accounted for a significant portion of ArcelorMittal's "Flat Carbon Europe" division's €840 million loss in the past couple of years when Europe's demand for steel is 30 per cent less than in 2008? The answer is apparently not as Laura Angers for La Jeune Politique last week, commented that the aggrieved steelworkers in Florange have erected a tombstone dedicated to President Hollande, marked with the word "Betrayal".

Another key element of M. Hollande's election campaign was the fixing of the country's Budget Deficit and the National Debt and for many of the Governments more serious critics this is the main issue. Was France 24 deliberately goading the President on 28 February this year when it reminded him of what he had made a central plank of his campaign? The current affairs broadcaster teased: "...the sacred cow, the holy grail. France's Budget Deficit would not, repeat not, exceed three per cent of GDP in 2013...It was etched in stone". Someone at France 24 surely knew what was soon to be announced for in early March, Pierre Moscovici, France's Finance Minister, admitted that the Budget Deficit target will indeed be missed in 2013, but he was very confident that the (under) three per cent target will be met in 2014.

It must be admitted that many countries in the developed world would like to be in France's errant shoes, at least on this Deficit score, if only because their deficit is worse, Britain included. The Deficit for 2012 came out at 4.5 per cent of GDP and the European Commission expects 2013's shortfall to be about 3.7 per cent. Expectations in the UK meanwhile, indicate that further, meaningful reductions in its deficit have stalled. And for all the bad news coming from INSEE, France has a consistently better productivity record than the like of the UK.

In September 2011, Britain's Office for National Statistics (ONS) published "International Comparisons of Productivity" and found the following:

2010 GDP per worker at Constant Purchasing Power Parities; index, 2004 = 100

France 105; Germany 99; UK 102; USA 107

2010 GDP per hour worked on same basis as above:

France 105; Germany 101; UK 103; USA 108

President Hollande's approval ratings, as now widely reported, have bombed faster and further than any previous President of the Fifth Republic. Typically they are about 24-25 per cent but there's the odd poll that places his approval at 22 per cent. The cause of his predicament might simply be due to his, and many of his Ministers, relative inexperience in high office. Having been Mayor of Tulle unfortunately, doesn't count for much. Guillaume Menuet, European Economist at Citigroup says: "France is navigating in a fog" and calls for more transparency and clarity from the Government, particularly when dealing with business. Jennifer McKeown of Capital Economics was a bit more blunt when she told CNBC that France was about to experience fiscal austerity and had a weak competitive position, not helped by a poor export outlook. Adding for good measure the French "resistance to labour market flexibility".

With the unemployment so high already, what a nightmare for the French if President Hollande had a Damascus moment and initiated a Thatcher-like programme to instil just such a "labour market flexibility".