Sunday, November 26, 2006

Clear economic choice in French election

The International Herald Tribune is running an article that looks at the fairly large economic choice French voters will be making when they go to the polls next year.

For Nicolas Sarkozy:
The economy is a particularly thorny matter for Sarkozy, an advocate of the free market who is presenting himself as offering voters a new alternative despite the fact that he has served as a government minister under Chirac nearly without interruption since 2002...What jumps out most is a pledge by the Union for a Popular Movement to do away with France's two-tier system of work contracts and introduce a single contract with streamlined dismissal procedures. The aim is to end a split in the labor market between employees on generous open-ended work contracts that are costly to terminate and those on short-term contracts with little security.

The party also proposed abolishing the 35-hour workweek in all but name by offering to cut payroll taxes and social contributions on all extra time worked. The philosophy behind the program, says Emmanuelle Mignon, economic adviser at Sarkozy's party, is that you have to "work more to earn more."


For Segolene Royal:
The Socialists, in contrast, want to stimulate growth by increasing purchasing power. They propose raising France's monthly minimum wage to €1,500, or about $1,960, by 2012, an increase of about 20 percent from the current €1,245, and they say the state should guarantee a minimum pension level near the level of the minimum wage. Bolster buying power, the thinking goes, and people will jump-start growth by spending more, thus inciting companies to hire. The party also pledged to stimulate innovation by raising public spending on research.

As for the 35-hour week, which currently is not applied across the board, the Socialists want to abolish exemptions to give everyone access to the shorter hours - the opposite of what Sarkozy's camp is planning. They have also pledged to penalize companies that hire on short- term contracts, while rewarding those that do not. And they have vowed to renationalize Électricité de France.

The article continues, saying that because Royal has moved farther to the right on certain issues (i.e. boot camp for delinquents), she will have to adopt leftist economic policies in order to secure the far-left. Sarkozy will attempt to play up his pro-market beliefs, hoping that that will appeal to a French populace that is fed up with high unemployment and slow growth. At the end of the day Royal will probably stay straddling the middle, favoring things like a higher minimum wage while also toying with slightly less labor restrictions. After all, her strong primary win gave her a broad mandate to lead the Socialist party away from some of its worn-out traditions, and a pragmatic approach will win over a party platform.

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