Trailing in polls and facing economic slowdown, French President Nicolas Sarkozy staged a crisis summit of labour and business leaders yesterday to seek job creation measures and maybe save his own.
The so-called “social summit” came just five days after Standard and Poor’s downgraded France’s credit rating and dealt a severe blow to the right-winger’s hopes of getting re-elected in elections three months from now.
The leaders of the five main unions and three employers’ groups sat down around a rectangular table in the President’s Elysee palace along with Sarkozy, his Prime Minister and six ministers.
The leader was due to present them with his plans to try to make French firms more competitive by cutting payroll taxes, make working hours more flexible and reduce the nearly three million unemployed.
He will also discuss his hopes of quickly introducing a new tax on financial transactions, a move which has irked his European partners.
“The question is clear,” Sarkozy said Tuesday during a visit to the southern Ariege region.
“Will French society choose employment, and thus growth and competitivity? Or will French society make a short term choice, believing that we can continue to finance a social model with deficits and public spending?” he asked.
Sarkozy is pinning his hopes on yesterday’s summit to reverse the poll ratings that put him in second place behind his Socialist challenger Francois Hollande and just ahead of far-right National Front leader Marine Le Pen.
But unions oppose his “social tax” plan, which would cut payroll charges on employers and workers and recoup the revenue mainly by raising sales tax.
They are against measures that would hurt consumers’ pockets at a time when the economic outlook is grim and the country expected to fall into recession. Jean-Claude Mailly, the leader of Force Ouvriere union, reiterated his opposition before he went into the meeting, denouncing the “economically and socially dangerous logic” of Sarkozy’s arguments.
“One cannot deal with the issue of financing social protection just like that, in three weeks,” he said.
Francois Chereque, CFDT union leader, also expressed doubt about the social tax and regretted that Sarkozy was trying to rush through reforms. He said he expected little to come out of the summit.
Sarkozy has challenged unions and employers to come up with “daring proposals” to improve France’s competitivity and boost employment.
But the problem for the president is that he wants to push through potentially costly reforms while France is in a budget-tightening cycle.
Union scepticism is shared by many French, with nearly three out of four people saying they believe the much-publicised summit will result in little or no change, according to a poll in the communist daily L’Humanite.
Sarkozy reportedly told allies last month: “If we lose the triple-A (credit rating), I’m dead.” He had staked his re-election bid on convincing voters that he was the only candidate with the stature and experience to save France from economic meltdown.
Sarkozy justified pushing through two austerity packages as necessary to defend France’s triple-A rating.
Friday’s downgrades had been mostly expected, but analysts said the move showed the eurozone debt crisis was worsening.
The downgrade means France may now have to pay more to borrow on international money markets, which could raise the cost of borrowing for businesses and households and dampen already faltering economic growth.