Sarkozy vows to act on economic and social crises in Paris

FRENCH PRESIDENT Nicolas Sarkozy responded last night to nationwide demonstrations that mobilised more than a million French people on January 29th by promising wide-ranging negotiations with social partners, to begin on February 18th.

But it is far from certain that the promise of talks on higher compensation for part-time workers, benefits for jobless youths who have not contributed to unemployment insurance, and profit-sharing within companies, will defuse France’s looming social crisis.

In a 90-minute television interview broadcast live on three television networks, Mr Sarkozy said it was understandable that the French are worried. “How could it be otherwise? The world hasn’t known a crisis like this in a century. This is the first time that a crisis hits all countries, without exception.” The economic crisis is “an unavoidable reality”, Mr Sarkozy said.

“I must act in such a way as to ensure that France enters it as late as possible and leaves it behind as quickly as possible.” Because France is a democracy, he added, “I must listen to all those who did not demonstrate too.”

Last week’s demonstrators accused Sarkozy of bailing out rich bankers while neglecting the “little people”. “We mobilised substantial means to save the banks,” Mr Sarkozy admitted. “By saving all the banks, we saved French people’s savings. So far it hasn’t cost the French people a cent.”

His government has spent €25 billion of the €320 billion earmarked for banks. That money has been loaned, and will earn €1.4 billion for the French treasury this year, which will be spent on social policies.

Mr Sarkozy was elected on a platform of “rupture” with previous practices. “Rupture was never an objective, but a means,” he said last night.

“The heart of my campaign was to rehabilitate work. France knew lower growth and higher unemployment than other countries. We had to modernise the country. Even when economies were growing worldwide, our unemployment was more than 7 per cent.”

The 35-hour working week, established by the 1997-2002 socialist government, had been a “monumental historical error”. Based on the principle of sharing working, the policy created more joblessness and dragged salaries down, Mr Sarkozy said.

Since coming to office in May 2007, Mr Sarkozy has carried out several of the reforms he promised: a 50 per cent ceiling on taxation; a tax holiday on overtime pay; the end of “special regimes” of earlier retirement for some public sector workers; guaranteed minimum service in public transport on strike days.

But Mr Sarkozy seemed to lose his nerve last December, when French lycée students protested an attempted reform of secondary schools.

Mr Sarkozy insisted last night that he has not abandoned the lycée reform, but merely postponed it to give him time to explain it. University students and professors have since taken to the streets in protest at a reform that seeks to make higher education autonomous and self-financing.

In Strasbourg yesterday, Valérie Pécresse, the minister for higher education, was booed and police used tear gas against demonstrators.

The French president said his response to the crisis is “not immobility but reform”. Asked whether he fears a social crisis, Mr Sarkozy said “there are demonstrations very often in France. It’s a constant in our country. If you are going to stop reforms as soon as there’s a demonstration, it’s not worth trying to carry out reforms.”

When he reformed the “special regimes”, Mr Sarkozy noted, there were nine days of strikes. “I must listen to the demonstrators. I hear them. But I have a mandate to make the country more competitive and to work for full employment.”

Laurence Parisot, the head of the French management association MEDEF, has criticised the US president Barack Obama’s decision to cap salaries in companies receiving government aid at $500,000. “I asked all the directors of banks to give up their bonuses this year,” Mr Sarkozy said. “This year, there will be zero bonuses, without a law.” The French president said he is thinking about taking a measure similar to Mr Obama’s, but leans against “a general rule for all” on the grounds that it is “normal” for executives “who make companies grow to earn a lot of money”.

Compared to the US, which lost 75,000 jobs in one day, or Spain, where 200,000 jobs were lost in December, France is faring relatively well, Mr Sarkozy said. For the past four months, between 40,000 and 50,000 French jobs have disappeared each month.

Mr Sarkozy’s €26 billion recovery plan has been criticised for concentrating on investment, rather than putting cash in the hands of consumers. “I gambled on investment because enterprise means jobs,” he said.

Prime minister François Fillon this week unveiled a plan for 1,000 public works programmes, including the restoration of cathedrals, construction of high-speed train lines, renovating university campuses and a new nuclear reactor to enable France to export electricity. “No one knows exactly how many jobs will be created, but we know these projects will create jobs,” Mr Sarkozy said.