Emmanuel Macron is now officially a candidate for re-election, France 24 sums up his five-year term in four parts. After foreign policy came the economy, an area in which the president kept his promises of reform, but with mixed results.
To hear the support of Emmanuel Macron is a strength of the presidential record. For several months now, the melody has been praising the good economic results obtained during this five-year period, which is coming to an end. Attractiveness, competitiveness, growth, unemployment, purchasing power: all signals are green, emphasizes Emmanuel Macron in his letter to the French, who formalized their candidacy on Thursday, March 3.
Does this complacency correspond to reality? As is often the case in economics, it all depends on the point of view adopted. Emmanuel Macron came to power with one goal in mind: “to liberate labor and the spirit of enterprise,” reaffirmed his 2017 agenda, to help restore growth, reduce unemployment and increase the purchasing power of the French.
To do this, the former economy minister under François Hollande wanted to carry out a deep reform of the French economy, both to achieve concrete changes in the country and to change the perception of France towards foreign investors.
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On the business front, Emmanuel Macron cut his corporate tax rate from 33.3% to 25%, cut labor costs significantly, turning the $20 billion annual CICE tax credit into a permanent cut in social security contributions. and amended the Labor Code to make it easier for employers to fire. On the private side, he abolished the wealth tax (ISF) and introduced a single fixed rate (PFU) on capital income to encourage, according to the theory of percolation, investment in business and in the real economy.
Five years after joining the Élysée, the raw numbers are quite flattering and, according to Economy Minister Bruno Le Mer, “the French economy is doing very well.” Growth primarily hit 7% in 2021, according to INSEE’s initial estimate released at the end of January. This is due to a rebound following the 2020 record recession (-8%) linked to the Covid-19 crisis, but French gross domestic product (GDP) progress is among the strongest in the euro area. The unemployment rate fell to 7.4% in the fourth quarter of 2021, a level it has not seen since 2008. As for the image of France abroad and its attractiveness, they have improved significantly. Thus, La République en Marche claims that France has become the most attractive country in Europe over a five-year period, with 985 projects for foreign investment in 2020, compared to 975 in the United Kingdom and 930 in Germany, according to the attractiveness barometer set by EY Consulting.
More dangerous and lower quality jobs
However, these good results do not speak volumes, especially in terms of attractiveness and international competitiveness. France’s trade balance in particular remains a major problem due to the foreign trade deficit (the difference between what France imports and what it exports), which according to INSEE increased by another 7.3 billion euros in 2020 to reach 65 .2 billion euros. .
Moreover, the unemployment rate was initially able to fall due to the increase in the insecurity of employees. To encourage hiring, it was necessary to reassure superiors of their ability to separate from their employees in case of difficulties, in accordance with the spirit of the Labor Orders adopted in 2017. ) was thus facilitated. In France in 2020, according to INSEE, there were 3.3 million people with this status, or 12.4% of total jobs. But, above all, the change in the Labor Code made it possible to establish a scale of compensation paid by the branch court in case of dismissal without a real and serious reason. Employers can now fire without good reason under the law, knowing in advance how much it will cost them.
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In addition to the unreliability of workers, the five-year term was marked by a decline in the quality of positions held. Thus, Mediapart notes that the average working hours decreased from 32 hours to 30.9 hours per week between the second quarter of 2017 and the third quarter of 2021. The decline is partly due to the Covid-19 crisis, but is also a sign of a change in the work done. Many of the jobs created are low value-added market service jobs. So in January, the government was proud of the creation of almost a million companies in France in 2021 – “just a historical record”, according to Bruno Le Maire – but that was for 641,543 microentrepreneurs (the new name for autoentrepreneurs). .
Finally, in France in 2020, 1.9 million people were no longer actively looking for work, while at the same time they were no longer counted in unemployment figures. So the 7.4% rate is also the result of write-offs that have risen sharply since the break in 2020, as economist Maxim Combs points out on Twitter. Similarly, the unemployment insurance reform, fully implemented from autumn 2021, could reduce the number of Pôle Emploi registrations due to more restrictive conditions for accessing benefits, experts say, who, however, do not look back to fully appreciate the impact of the reform. . .
[Le saviez-vous ?]
Remove the unemployed to stop counting them pic.twitter.com/Ht3wECdlGi
— Maxim Combes #AlloBercy (@MaximCombes) February 14, 2022
Does not affect productive investment
On the tax side, although corporate bailouts and other incentives have not been recently assessed, there is no evidence that tax cuts for the richest have had an impact on productive investment. “Observations on the main economic variables—growth, investment, household financial flows, etc.—before and after the reforms are not enough to draw a conclusion about the real effect of these reforms. to assess, through this means alone, whether the repeal of the ISF has allowed the redirection of the savings of the relevant taxpayers to finance companies,” states the third capital tax reform assessment report compiled by France Strategy – an organization attached to the Prime Minister – and published in October 2021. On the other hand, the same report notes that Emmanuel Macron’s reforms resulted in a 64% increase in dividend payments in 2018.
Thus, the wealthiest French have not invested in the real economy, but their purchasing power has indeed grown over the past five years. In this, they are the big winners of Macron’s five-year term. Thus, the richest 1% received, according to a study by the Public Policy Institute (IPP), published in November 2021, an average increase of 2.8% to all their income after taxes and benefits. The growth is even more striking among the richest 0.1%, whose purchasing power grew by about 4%.
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The drain, for its part, was made drop by drop for the rest of the population, some of whom descended on the carousel to witness their discomfort during the yellow vest crisis. According to the IPP study, the overall average increase in the standard of living of all French people between 2017 and 2022 is about 1.6%. The poorest 5% of households were the losers: their purchasing power fell by an average of 0.5% during Emmanuel Macron’s rule.