The French Are in No Hurry to Return to Work
(Bloomberg Opinion) - After French President Emmanuel Macron has brought everything to a standstill in a comprehensive war against the corona virus, he wants to get the economy going again. The dark draconian days of Covid-19's closure are over, confirmed cases have continued to decline, and cinemas, museums, and other schools will reopen on Monday.
To this end, he uses topics from his 2017 presidential campaign as a pro-job candidate, which are assessed on the basis of his ability to shake up the country's rigid labor market and complex pension system: "France has to work full again". In a national television speech on June 14, he said: "We have to work and produce more."
These challenges aren't unique to France or Europe, but few other countries had experienced a stressful cycle of social unrest and anti-government protests in the pre-virus period, which contributed to Macron's approval rate stagnating at 38%.
Unions plunged into his words after his television speech and accused him of trying to make up for lost economic time by forcing people to work longer - which was precisely the reason for the protests against his now suspended attempt at pension reform. The newspaper exemption covered Macron's features with the head of Nicolas Sarkozy, a center-right predecessor, whose 2007 mantra was: "Work more to earn more."
It is difficult to assemble the troops after a world is created without a job. The sudden return of the office in people's minds creates stress: Empreinte Humaine estimates that around 42% of workers are in mental distress. Although not always unjustified, every excuse is given for not returning to work, from the burden of childcare to the fear of using public transport again, and doctors report a steady influx of people requesting sick leave.
No wonder Macron made school a duty again: by June, 40% of teachers were out of the classroom, and distance learning added to parents' logistical nightmares. Some employees who have been paid to stay at home have become familiar with this new parallel reality. "At first I felt guilty for not working," a staff member on leave told me. "Then it went away."
In an ideal world, reopening the economy would bring all of these workers back online. However, the French economy is still scarred by one of the strictest barriers in Europe, which has depressed the tourism industry and reduced the factories' production and supply chains. According to the pollster Ifop, the population was neatly divided into three parts: 34% worked on the front line (from doctors to grocery workers), 30% worked from home and 36% didn't work at all. The latter is the biggest political challenge.
In order to avoid mass layoffs, the Macron government has rightly introduced one of the most generous vacation programs in Europe, in which the state pays up to 80% of gross wages. Companies that are forced to close could get jobs and avoid the hassle of hiring people later. According to Fitch Ratings, the program included almost half of the French workforce. This corresponds to about a third of the workers in Italy and around a fifth in the UK and Germany.
However, reducing this lifeline by $ 17 billion ($ 19 billion) is proving very difficult.
Businesses are unable to resume France's entire army of workers on leave. The virus is still with us, as is social distancing, which means that the cost of doing business has increased, although demand has decreased. Generous government support such as guaranteed loans that help businesses make them more indebted and less prone to hiring or spending. According to research company Rexecode, 68% of companies have delayed or plan to delay investments. Concerned bosses are doing everything they can to maintain productivity in the workplace, but aerospace and automotive are examples of industries where vacation days will continue. There is no point in getting a valuable crutch out of the way if the alternative is more job cuts.
The risk of indefinite subsidies to the economy is that you waste tax money on “zombie” jobs, which may never be feasible, argues economist Patrick Artus of Natixis SA. [It may be better to focus on difficult sectors] and offer smaller but more direct wage subsidies. Tax incentives could then focus more on productive areas such as the green economy, create new jobs and help to retrain workers in the manufacturing sector.
Here, Macron has the opportunity to leave more decisions to local authorities and companies that have special agreements with employees to cut wages. An example of this is, according to Technologia, an aerospace company that has agreed to cut wages to avoid 700 potential layoffs.
At the moment it looks like going back to work will be a gradual thing. Covid-19 is still with us, and so will government subsidies. In the meantime, workers will be tempted to resist the demands for harder work, similar to Corinne Maier's 2004 book Bonjour Laziness, which advocated a "break away" from corporate life. And Macron will probably have to change his tune again to be heard.
This column does not necessarily reflect the opinion of the editors or Bloomberg LP and its owners.
Lionel Laurent is a Bloomberg Opinion columnist dealing with Brussels. Previously, he worked at Reuters and Forbes.
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