Algirdas Brochard // 19 June 2017

On 7 May 2017, the French elected as their new President a 39-year-old former banker, someone neither left nor right, unknown to them until three years ago, who decided to launch his own independent political movement, En Marche!, on 6 April 2016.

During his presidential campaign, Emmanuel Macron stood on a reformist and centrist platform, promising not to shy away from changing France and the EU, but admitting that he first needs to deliver on reforms at home before attempting to transform “Brussels”.

Two important indicators on which France will be judged over the next few years are the public deficit, which currently stands at 3.4% of GDP (down from 4.8% in 2012, but still above the 3% threshold), and the unemployment rate. Unemployment in France still stands high, at 9.3%. The same figure is at 3.9% in Germany and 4.6% in the UK.

In forming his government and choosing his advisors, Emmanuel Macron built a strong and coherent team to live up to the high hopes placed on him. Rejecting the old political customs, Mr. Macron picked his government with a mixture of left, centre and right-wingers, gender parity, and a strong emphasis on Europe.

On the EU side of his reforms, Macron has put great emphasis on developing a strong Franco-German partnership, which he wants to be one of the driving forces of the EU. Both his Prime Minister and Economy Minister are German-speakers and the President’s diplomatic advisor was, until nomination, the former French Ambassador to Germany. A good relation with Angela Merkel is crucial for Mr. Macron if he wants to push for an ambitious EU-wide reforming plan. For example, the newly elected French President has already indicated that he would like to create a common Eurozone budget for funding investment to boost economic growth and that he is ready to change EU treaties. Whilst some of Mr. Macron ideas are indeed interesting, all that glitters is not gold. In fact, in recent days news have emerged that the newly elected French President is heading for a clash with the European Union over free trade.

Let’s now go back to France. Contrariwise to what his predecessor did, Mr. Macron started to advocate for labour reforms only weeks after being invested. The president has imposed a tight schedule: he has already started meeting the social partners and a draft for a bill will be presented to the cabinet on 28 June. If approved, this bill will allow the government to legislate by ordinances. If the law passes Parliament (where last night Macron obtained around 61% of the seats), the Council of Ministers will be able to take ordinances that enter into force immediately. Parliament will still need to approve legislation, but ordinances reduce the time it takes for a law to come into force. The Presidency expects the first ordinances to be signed in September.

In his measures, Macron navigates the treacherous path that labour reforms are in France, by promising for instance not to change the controversial 35-hour working week but instead to develop company agreements. This specific measure would enable employees’ representatives to negotiate their salaries, working conditions and professional formation directly with their firm (these agreements are currently generally defined on a branch level, a grouping of multiple enterprises belonging to the same activity sector).

Other important areas of Mr. Macron’s labour reform include capping the indemnity that employees can receive at industrial tribunals in case of dismissals; improving labour mobility by allowing employees who resign to become eligible for unemployment benefits; and simplifying the labour code, which is currently more than 3,000 pages long.

A threat to Macron’s agenda is that he is perceived by some to have little popular legitimacy. Macron got 24% of the vote in the first round of the presidential elections, whilst 21% chose the far-right candidate Marine Le Pen; 20% voted for François Fillon of the centre-right and 19% embraced the socialist ideas of Jean-Luc Mélenchon from the far-left. During the first round of the legislative elections that followed, abstention was higher than 51%.  Yesterday, at the end of the second round of these legislative elections, just 43.6% of people eligible to vote went to the polls.

All of this might prove somewhat problematic for Mr. Macron. In fact, it has been shown in the past how difficult it is to pass labour market and welfare reforms in France. In 1995, for instance, when the Prime Minister Alain Juppé decided to push for welfare reforms, the country was affected by a general strike that paralysed the entire transport system for three weeks.

Over the last few weeks, Mr. Macron reiterated many times his steadfast determination to pursue his liberal manifesto. Following a skilled navigation of France’s institutions and a striking victory in the National Assembly, he appears to be in a strong position to deliver on his promises. Now, will he be able to do so?