Five years of Macron: Yellow Vests, Covid-19 stymie plans for social cuts (Part 3 of 4)

This is the third installment of FRANCE 24’s four-part series on Emmanuel Macron’s record as French president after previous looks at foreign policy and economics.

After winning office in May of 2017, Macron quickly set out to trim France’s social welfare spending. That summer, the freshly elected centrist chose cuts that targeted low-income earners – a €5 a month cut to personalised housing aid and a massive reduction of subsidised employment contracts.

Those measures were unpopular – but in line with the logic that a new French leader get the unpopular stuff out of the way early on. They also fit with Macron’s budget-minded ethic at the beginning of his five-year term. Macron, who had served as economy minister under former Socialist president François Hollande, reasoned that if he was to boost purchasing power and stimulate business – while respecting the European Union’s golden rule and bringing the deficit under 3 percent of GDP – there was no way around slashing social welfare spending.

Those early decisions had staunch advocates in Macron’s government – the fiscal discipline proponents the centrist president had poached from the right. Édouard Philippe, Macron’s first prime minister, Economy Minister Bruno Le Maire and Interior Minister Gérard Darmanin, who initially served under Macron as budget minister, were all transplants from the conservative Les Républicains party.

Macron’s first economic measures – ending the wealth tax, imposing a 30 percent “flat tax” on capital gains – went further in earning the new French leader a moniker he has yet to shake: “le président des riches” (the president of the wealthy).

The nickname stuck as Macron persisted in seeking a deep revamp of the French social model, which is either beloved or scorned depending on one’s perspective. “We drop insane cash on social allowances and people are still poor. We don’t see the end of it. The people who are born poor stay poor. The people who become poor stay poor … People have to be made accountable,” Macron was seen telling advisers in a June 2018 video.

Three months later, the government rolled out a four-year, €8.5 billion “poverty plan”. The project sought to rethink the French aid system from top to bottom in the name of “eradicating extreme poverty” within a generation. It sought to provide free breakfasts in some schools, €1 school lunches in some municipalities, daycare spots for children from underprivileged families and a new universal benefit meant to consolidate a number of existing social allowances. The plan’s objectives were ambitious, but they gradually fell by the wayside. And yet spending cuts in other sectors remained a priority.

‘There is no magic money’

Indeed, Macron’s 2017 campaign platform had planned for some €25 billion in savings, including €15 billion in the healthcare sector. But as a result, the public health budget wasn’t meeting the sector’s needs, with personnel increasingly stretched to the breaking point. When a healthcare worker appealed to Macron for more resources back in April 2018, the president replied, “There is no magic money.” The president’s top priority was respecting France’s budget commitments to Brussels. And on that score, the results were clear for all to see: France’s budget deficit dropped from 3.4 percent of GDP in 2016, before Macron’s election, to 2.8 percent in 2017 and 2.3 percent in 2018.

But raising the carbon tax on fuel a few months later was the last straw for some in France and the result would come to disrupt Macron’s plans. The Yellow Vest protest movement began in November 2018 as a motorists’ revolt against rising fuel prices (French drivers are required to keep the high-visibility vests inside their vehicles as a safety measure) before escalating into a wider rebellion over the rising cost of living and against the government. At first, France’s leadership downplayed the movement. But within weeks, it could no longer be ignored. As the fiery protests took hold on roundabouts nationwide, Macron was obliged to change course.

To quell tensions in early 2019, Macron launched the Great Debate, a months-long pursuit of dialogue meant to register public complaints across the country. He also took action to boost purchasing power, including a €5 billion income tax cut, a €100 bonus for low-income workers and an increase in minimum pension benefits. The controversial carbon-tax hike, meanwhile, was simply cancelled. Altogether, the bottom line was €17 billion in fresh public spending.

With the Yellow Vest crisis behind it, the government renewed its penny-pinching reform efforts, even at the risk of antagonising the country’s labour unions. But worsening conditions in hospitals raised tensions with healthcare personnel throughout 2019. Finally, in November of that year, the government pledged €1.5 billion for the sector over three years, promised bonuses for nurses and nurses’ aides, and assumed a third of the debts hospitals had incurred. But healthcare workers were unimpressed with the government’s emergency plan. More than 1,000 hospital doctors, including 600 department heads, resigned in protest from the administrative functions of their jobs in January 2020. And the worst was yet to come for France’s hospitals. 

Meanwhile, Macron’s promised unemployment insurance reform, adopted in 2019, raised the bar to qualify for benefits while trimming the amounts allocated to individual jobseekers. Those alternating between short contracts and periods of joblessness were penalised. And while Macron had promised over the course of his 2017 presidential campaign that independent workers and employees who chose to leave their jobs would gain access to jobseeker benefits, the conditions required to qualify were particularly restrictive in practice. The government explained that opening the system to too many people would have spurred unacceptably high spending. Indeed, cutting costs there had been a Macron campaign pledge, too; he had promised €10 billion in unemployment-insurance savings.

Finally, at the tail end of 2019, the government set out to push through pension reform that was also meant to bring in savings. The revamp sought to introduce a new universal points system indexed to inflation and a so-called pivot age. That latter controversially sought to raise the age at which French retirees could collect a full pension by two years, to 64, while maintaining a legal retirement age of 62. The measure was not well received. Hundreds of thousands took to the streets in protest for weeks on end in late 2019 and early 2020. No small feat, the strike action became the longest ever in the history of the SNCF national public railway company and Paris public transit (RATP) as transportation workers sought to save their coveted special pension regimes. The government would finally take the controversial step of forcing the reform through parliament without a vote on February 29, 2020.

‘No matter the cost’  

All of this was the prelude to a mammoth new crisis, the Covid-19 pandemic, which would yet again flummox Macron’s budget-cutting dreams and inflict overlapping health and economic crises on much of the balance of his term. In March 2020, Macron suspended his pension reform and delayed the full deployment of his unemployment insurance revamp. Most importantly, Macron made a bold pledge that came to be known as his “no matter the cost” pandemic policy: He promised, whatever the price tag, to support public hospitals, save businesses and jobs, and stimulate an economy that would ultimately shrink by 8 percent, a recession deeper than any France had known since World War II. 

The “magic money” Macron couldn’t produce for healthcare personnel earlier in his term suddenly flowed freely and widely. France’s healthcare budget grew by 9.4 percent in 2020 and 7.4 percent in 2021, with healthcare workers winning €9 billion in salary increases in the summer of 2020. Overall, the emergency measures France adopted in 2020 and 2021 cost €133.5 billion, according to the country’s Treasury. France’s budget deficit, meanwhile, rose to 9.2 percent of GDP and public debt soared to more than 155 percent in 2020. A far cry from the budgetary sobriety Macron had made the hallmark of his early years in office.  

>> Macron unveils re-election manifesto, vows stronger France in time of crisis

But as 2022 approached, with Macron eyeing re-election, the centrist incumbent was obliged to reassure the conservative segment of his base. His unemployment insurance reform finally came into effect in its entirety in the autumn of 2021. And the watchword became responsibility. “We want to pursue the redefinition of our social contract, putting duties before rights, from respecting authority to receiving social benefits,” government spokesman Gabriel Attal told the daily “Le Parisien” in January.

Hitting the campaign trail in March, Macron has carried through on that vision. He pledged last week that, if he is re-elected in April, he will condition welfare benefits on recipients dedicating 15 to 20 hours a week to rejoining the workforce, either through job training or partial employment. As for Macron’s postponed pension reform, the president dropped the complex rejig once planned in favour of another that is hardly less controversial: he promised to raised France’s legal retirement age by three years, to 65, if voters hand him a second term.

This article has been translated from the original in French.