Macron’s medicine for France

French president Emmanuel Macron gears up to take on the rail unions.


The president has the people behind him
(Image credit: This content is subject to copyright.)

"Reform of the railways has constituted a third rail for French politicians," says The Sunday Times. So far, no president has managed to curb railway workers' exorbitant privileges. The unions "still glory in their defeat of Jacques Chirac in 1995". No wonder, then, that they have reacted furiously to President Emmanuel Macron's attempt to modernise the system, embarking on a series of strikes designed to paralyse the rail network for three months.

Macron isn't exactly shooting for the moon. He merely wants to abolish ridiculously generous perks relics of the days when shovelling coal into steam engines was backbreaking work for new employees. Train drivers may retire at 50, while they also enjoy free train tickets, free health care, and subsidised housing.

The state railway system, SCNF, has racked up a staggering €47bn in debt and is "ill-prepared for upcoming competition" under EU rules, says The Economist. And now Air France workers have also gone on strike, while discontent has spread to universities. So while the changes themselves aren't hugely significant, this is a pivotal moment for France. "It goes without saying that Macron must keep his nerve. A government defeated once by the street will suffer irrevocable damage to its reformist credentials."

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He might just do it

Macron could well succeed where his predecessors have failed. For one thing, he has already managed to push through some structural reforms (see below).

Moreover, as Carl Mortished points out in the Evening Standard, he is the first president who came to power on a reformist ticket. Previous presidents who attempted reforms, including Franois Hollande and Jacques Chirac, enjoyed no such legitimacy as they had not prepared the ground with their manifestos. Macron also founded his own political movement, which is backing him up in parliament. So he is not beholden to the vested interests of a party.

It also bodes well that "the love affair between the French and their fortress state, withits cosseted public sector workers and privileged professions, is gradually cooling off", adds Mortished. People seem to be realising that reforms would preserve expensive public services rather than undermine them, and are less inclined to interpret attempts to end expensive privileges as an attack on workers. Of respondents in a poll last Friday, 57% agreed with curbs on staff perks.

Macron's success or failure will also be crucial for the direction of Europe as a whole, says The Times. His plans to "reform the European Union into a more flexible institution will not get a hearing until he can get his own house in order".

Iron Man must hold his nerve

As President Emmanuel Macron squares up to the unions, he can draw encouragement from his track record. In 2015, Macron was the economy minister in Franois Hollande's Socialist government when he introduced a package of measures that became known as La Loi Macron.

It introduced a modicum of flexibility into France's ossified labour market by reducing union control over working hours. It deregulated cosseted sectors such as notaries and liberalised Sunday shopping hours. The employers' federation was impressed, heralding it as "a real step in the right direction".

Last autumn, having become president, he ploughed on, using his authority as a newly elected president backed by a parliamentary majority to liberalise the labour market further. The new rules cap court-awarded redundancy payouts for unfair dismissals; save small firms money and hassle by allowing them to bypass union agreements; and simplify worker representation on boards. They also decentralise collective bargaining: companies can make their own pay deals with workers rather than being obliged to adhere to industry-wide agreements.

This time, however, resistance to his reforms is far greater than on previous occasions. If he prevails, says Gavin Mortimer in The Spectator, "he'll be entitled to call himself the Iron Man".

Andrew Van Sickle

Andrew is the editor of MoneyWeek magazine. He grew up in Vienna and studied at the University of St Andrews, where he gained a first-class MA in geography & international relations.

After graduating he began to contribute to the foreign page of The Week and soon afterwards joined MoneyWeek at its inception in October 2000. He helped Merryn Somerset Webb establish it as Britain’s best-selling financial magazine, contributing to every section of the publication and specialising in macroeconomics and stockmarkets, before going part-time.

His freelance projects have included a 2009 relaunch of The Pharma Letter, where he covered corporate news and political developments in the German pharmaceuticals market for two years, and a multiyear stint as deputy editor of the Barclays account at Redwood, a marketing agency.

Andrew has been editing MoneyWeek since 2018, and continues to specialise in investment and news in German-speaking countries owing to his fluent command of the language.