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“Today in Europe, the French economy is, with Germany’s, the economy other countries have greatest confidence in. We obviously have to do our utmost to keep it that way.”
- Francois Fillon, 2010
The President of France, Nicolas Sarkozy, is a popular figure who is frequently quoted in the news. But what about Francois Fillon, the Prime Minister of France? Not much is known about the man, though Fillon has many times been the force behind some of the most controversial reforms in France.
The 53-year-old Fillon sports a low-key public persona, a stark contrast to the man who shares a passion for sports cars and racing. As the Minister of Labor between 2002 and 2004, Fillon negotiated pension and wage reforms with trade unions. He is admired for introducing the Fillon law that reorganized the education system in 2005 and for bringing welcome changes to France’s controversial 35-hour work week policy in 2007. More importantly, Fillon is a close confidant of President Sarkozy and as his campaign director in 2007, played a pivotal role in getting Sarkozy elected. With such political successes behind him, Fillon is known to possess a steady and safe hand in administration.
Fillon’s latest offering is a set of austerity measures that he plans to put into place over the next few years, chiefly to curb France’s soaring budget deficit. France, which is the euro-zone’s second biggest economy, is still fighting off the effects of a global financial crisis that catapulted its budget deficit to 8% of the GDP in 2010. Fillon aims to bring France’s public deficit to the EU standard of 3%, a reduction of $127 billion.
To tackle these challenges, Fillon, working together with Finance Minister Christine Lagarde, announced that France will slash public spending by $54.48 billion over a span of three years as well as raise its minimum retirement age to 62 from 60. Pressed by Fillon, the entire pension system is expected to be overhauled. France’s expenditure on pensions amounted to 12.5% of the GDP in 2007, making it one of the highest spenders among fellow Organization for Economic Cooperation and Development (OECD) members whose average hovers around 7.5%. “The government will not compromise over the principal aspects of the pension reform,” promises Fillon in a statement.
The French government has announced that it will cut state operating
costs by 10% over 2011 and 2013, through measures like barring
pensions and interest payments.
In addition to these measures, Fillon expects to save $6.3 billion between 2011 and 2013 by straightening the chinks in the tax system. If all goes according to plan, Fillon predicts this number may climb to $10.8 billion. He anticipates saving another $44 billion by boosting tax revenues and around $19 billion by halting temporary extraneous spending originally designed to jump start the economy. What’s more, Fillon says he can slash nearly $3.8 billion from the government tab, by cutting 34,000 jobs per year from a pool of 100,000 government jobs that will become redundant by 2013.
Though these steps might undoubtedly be beneficial for the economy, they have not been popular with French citizens. The announcements were greeted by massive protests with more than 800,000 people pouring onto the streets in an expression of discontent. Recently, trade unions announced their decision to stage protests on September 7, the day the government will sit down to draw out a detailed plan of the pension system overhaul.
Critics point out that the weak point of the reform is that the government bases its tax revenue estimates on 1.4% growth in the French economy this year. Fillon, though, is confident. France’s second quarter GDP growth was 0.6%, an improvement from the mere 0.1% in the first quarter. “We've made a commitment to bring down our deficit by 2013 and we will concentrate all of our efforts on it,” he stated to party members.
France’s economic history shows that its government has not really maintained a balanced budget since the 1970s. The French government has always been a big spender even during non-crisis times, according to Jacques Delpla, an economist on the Council of Economic Analysis. And only the toughest of leaders can stand the heat to champion unpopular but needed austerity measures. Now, all eyes are on the man that Sarkozy once defined as being “the most perfect” for the job. Just how perfect remains to be seen.
Image Credit: Marie-Lan Nguyen with the author’s permission under a Creative Commons license
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