A Critique of Sarkozy's Special Regimes Reform

Bernard Girard calls my attention to this interesting critique of Sarkozy's reform of the special regimes at the RATP and SNCF. There were reports at the time that key interest groups were bought off with special "side payments" that were not publicly discussed. New research and a report by the Cour des Comptes appear to confirm this. Worth reading.

Chérèque Will Quit Leadership of CFDT

François Chérèque, who has led the CFDT since 2002, will retire in November and almost certainly be replaced by Laurent Berger, age 43. Chérèque's leadership will be remembered for his support of Fillon's retirement reform in 2002, a position he took without consultation with his members, leading to an eruption of internal and external opposition. But he survived and has reigned more or less tranquilly since then, to the point where his handpicked successor will undoubtedly be approved to replace him.

The CGT on the Eve of the Social Conference

The "social conference" promised by François Hollande begins today. Guy Groux looks at one of the major participants, the CGT, one of France's two leading trade unions, now in the throes of a crisis of succession. But even more important than that, Groux argues, is the difficulty the CGT has had in developing a response to the economic crisis:

La crise économique, financière et budgétaire bouleverse une CGT dont la stratégie revendicative demeure souvent très motivée par la défense résolue des acquis. Or la crise économique et budgétaire rend plus précaires et limitées, l’existence de pratiques redistributives ou celle de nouveaux financements publics ; elle renforce des formes de négociations collectives fondées sur des concessions mutuelles comme celles initiées dans l’Europe du Nord, par exemple. Or, si la CGT a récemment admis le principe de la négociation collective pour aboutir à de réels résultats à l’égard des revendications des salariés, est-on sûr qu’elle est aujourd’hui souvent prête à accepter des compromis impliquant de réelles concessions syndicales ? On peut en douter au regard des postures de dénonciation qu’elle adopte sur les accords liant l’emploi et la compétitivité des entreprises, la réforme des retraites, la récente augmentation du SMIC, la baisse envisagée des effectifs de fonctionnaires, les projets gouvernementaux sur la régularisation des travailleurs sans papiers, l’existence d’un pacte budgétaire européen, pour ne citer que ces exemples majeurs. Au fond, la culture historique et revendicative de la CGT se défie profondément des tendances à l’œuvre dans le capitalisme d’aujourd’hui tandis que la crise économique actuelle met en cause, et plus que jamais, l’essentiel des stratégies revendicatives de la centrale fondées sur un fort attachement aux acquis collectifs, statutaires ou juridiques des salariés. D’où un hiatus profond entre l’organisation de Bernard Thibault et le contexte économique où elle agit.

What Do the Unions Expect?

A five-minute audio survey of what the unions expect from the Hollande-Ayrault government.

Succession Crises

Both the UMP and the CGT are having difficulty settling on a new leader.

The UMP's predicament is of course no surprise. If I were casting a film, I probably wouldn't choose Copé for the role of party leader, because his ambition is so naked, raw, and obvious that he isn't quite believable in the part. Sarkozy was no less ambitious, surely, but he had the knack of projecting into his portrayal a little authentic concern with something other than his own success. His principal rival is the dark Iago of French politics, François Fillon, who is less enamored of the cameras but still a consummate player behind the scenes. And now, presenting himself as a fallback and proposing that the party leader should not be the standard bearer in 2017 (a position that must be driving Copé mad with rage) is the perennial Alain Juppé, a most capable fellow, once considered too arrogant to lead anything but rather humanized by a long traversée du désert in the Canadian wilderness following his conviction on corruption charges and declaration of ineligibility.

At the CGT, Bernard Thibault is leaving after what seems like an eternity at the helm, and he would like to choose his own successor. What's more, he wants her to be a woman, and this doesn't sit well with some of les gars. I'll be sorry to see him go. I've always enjoyed his haircut and blunt talk, although I harbor a sneaking suspicion that he was a little too susceptible to the flattery of the powerful to be a really effective union leader.

Unions Get a Little Taste

Another of my predictions was that unions would quickly test Hollande's resolve on matters such as retirement reform. And sure enough, Marisol Touraine has indicated that the rollback of the early retirement age to 60 will be slightly more generous than anticipated, because maternity leave will be counted in the required 41 years of cotisations. The unions want other concessions, including the counting of military service. But all of this is subject to approval by the prime minister, who raises the specter of "budget constraints":

Car devant la grogne croissante des syndicats qui mettent la pression afin d'élargir le périmètre des bénéficiaires, Marisol Touraine a déjà commencé à lâcher du lest. «Les congés maternité ou de service militaire seront comptabilisés», a pour la première fois reconnu la ministre, qui est cependant restée assez floue sur les périodes de maladie et de chômage qui - c'est justement l'objet des discussions avec les partenaires sociaux - pourront être «intégrées sous certaines limites». La ministre s'est bornée à rappeler l'objectif par an de ce retour à la retraite à 60 ans (150.000 bénéficiaires) et son coût (1 milliard d'euros). «Je rendrai un arbitrage en fonction des contraintes financières», a de son côté nuancé Jean-Marc Ayrault. Bref, rien n'est calé et les discussions à l'intérieur du gouvernement n'ont pas non plus débuté.

The Unions and the Election

Médiapart tries to get Jean-Claude Mailly of Force Ouvrière to throw his weight behind Hollande, but Mailly insists that the unions will not have an easy time of it no matter who wins the election. The constraints are in the country's economic situation, not the policy of either leading candidate:

La CGT estime que réélire Nicolas Sarkozy« ouvrirait, à coup sûr, une nouvelle séquence de lourds reculs sociaux ». M. Mailly, êtes-vous d’accord ?JCM. Je ne dis pas que ça n'arrivera pas demain si Nicolas Sarkozy est réélu. Je ne dis pas que si un autre candidat est élu il n'y aura pas de programme d'austérité. Moi, c'est ma plus grande inquiétude. Quel que soit le résultat de l’élection.

A Warning from Barry Eichengreen

Here:

The ECB is preoccupied by moral-hazard risk – the idea that supporting spending will relieve the pressure on governments to act. But it should also worry about meltdown risk – about the danger that its own failure to act, by leading to a deep recession, will undermine political leaders’ ability to take the steps needed to put their economies on a sound footing.

Eichengreen notes that German wage increases may improve the competitive position of southern-tier states:

The leading German trade union, IG Metall, has called for a 6.5% wage increase in the next annual round of negotiations. And German public-sector workers obtained an agreement at the end of March that boosts wages by 6.3% in the coming two years.
But this increase in German labor costs is, in fact, precisely what Europe needs to accelerate its rebalancing, because it will help to realign the competitive positions of the northern and southern European economies.
Southern Europe needs to enhance its competitiveness and export more, and has been criticized (not without justification) for failing to do more along these lines. But what matters are southern Europe’s costs of production relative to those of Germany, Europe’s export champion. That is why the prospect of rising German labor costs, after a decade of stasis, is actually one of the few positive economic developments on the European scene – hardly something that the ECB should resist.

One of the pressures that Hollande is likely to face after his election is from unions that have been keeping an eye on German wage increases. They would like to see the same thing happen in France. But France has not been the export champion that Germany is and has in fact been losing ground in key export markets to southern countries such as Spain and Italy. Consider this graph:

What this shows is a sharply deteriorating French trade position with Spain in Standard International Trade Code 7 (machinery and transportation equipment) and a less drastically deteriorating position in Code 6 (manufactured goods classified chiefly by material). Labor costs are not the only reason for this deterioration, but they are a factor, and wage increases after the election will compound matters. So Hollande may not be in a position to reward union expectations, and that could be a problem.