Today's La Tribune financial newspaper is typical of all of today's papers inasmuch as it carries an article on the above subject.  French consumer confidence has risen by 6 points since the presidential election.  This is attributed to the fact that Nicolas Sarkozy's first actions in government will fulfill his promises to reinvigorate the economy through a series of tax breaks and labor market reform.  He has already criticized the Finance Minister who seemed to be straying from what he had promised (for example that a certain percentage of mortgage payments would be deductible from income tax payments) and he has brought him back on track. 

Many people are also expecting Sarkozy to make it easier to find a job in France.  I remember last year assisting at a series of lectures in Paris given by Gary Becker, who won the Nobel Prize for Economics at the beginning of the 1990s for his work on Human Capital.  The lectures were organised by the Institut Montaigne, a private French think tank sponsored by the Axa Insurance Company and the American University in Paris (which has just signed a deal to move to much bigger premises than the ones it presently occupies).   Many French business people present at those lectures asked Becker how the French economy could be turned around.  His very clear reply was "Labor Market Reform".  It seems that that is what will now happen, but maybe not as quickly as Sarkozy would like.  In the first instance he will negotiate with all the trades unions and the business representatives and it is only if he cannot get satisfaction through negotiations that he will bring the negotiations to a stop and introduce new legislation.

The upcoming elections for the French parliament are expected to give Sarkozy an overwhelming majority and thus he will have no problems in introducing new laws.  However even supporters of Sarkozy's UMP political movement are worried that the majority would be too large.  If the UMP deputies do not have a strong opposition to think about they will probably start fighting among themselves and, as in the previous Chirac/Villepin government, some measures favored by the executive may fail to be brought in because of internal UMP opposition.

It seems that Nicolas Sarkozy is being influenced by the thinking of Michel Camdessus, who headed up the IMF until a few years ago and is now in charge of Jacques Chirac's new foundation for sustainable development.  Camdessus was asked by Chirac a couple of years ago to produce a report on what needed to be done to create more jobs.  One of Camdessus's ideas was to create one single type of work contract, instead of the thirty or so contracts that exist at the moment.  The direction of the "one contract" is the one that Sarkozy seems to be taking but French "particularism" will probably mean that a lot of exceptions to the suggestion of a universal contract will have to be taken into account.

 


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