During his victorious French presidential campaign earlier this year, François Hollande ran on the slogan “Change Is Now.” Yet just four months into his presidency, Hollande is already feeling heat from public opinion—and critics on right and left alike—for not changing things fast enough as he seeks to fulfill the seemingly contradictory objectives of beating back austerity, stimulating stalled growth through spending, and reducing France’s budget deficit all at once.
In response, Hollande and the cabinet of Socialist Prime Minister Jean-Marc Ayrault are now moving to accelerate the sort of investment and labor policies whose results French voters are likely to see quickly. At the same time, they’re also speeding preparations of a 2013 draft budget that must identify $37.5 billion in spending cuts—or offsetting new revenues—to fulfill European commitments to lower France’s budget deficit to 3% of GDP next year. To which we say: “good luck with that.”
Reinvigorated by August vacations—and prodded by sagging approval ratings–Hollande and his government hit the ground running this week with a series of measures seeking to convince France that change, indeed, is now. On Wednesday, Hollande led a cabinet meeting outlining planned legislation to create 150,000 jobs for younger people that will cost the state an expected $2.9 billion. Shortly before that, the government announced it will reconvene parliament two weeks ahead of its scheduled Sept. 24 date to quickly enact the jobs act—one of Hollande’s primary campaign pledges.
That wasn’t the only way Team Hollande was speeding its pace. On Aug. 28, French Finance Minister Pierre Moscovici made good on another Hollande campaign pledge by negotiating a six-euro cent (7.5 U.S. cent) cut in rising gasoline prices. The measure—which will be financed equally by the state and oil companies, and cost the state an estimated $300 million—wasn’t dramatic enough to generate a gasp of relief from French drivers. But it did nod to another Hollande’s campaign promise to freeze gas prices if they increase past certain levels.
That certainly represented change now, but it’s unclear whether Hollande’s delivery of the promised 150,000 youth jobs will earn the President renewed public support—even once it’s swiftly passed by parliament. The scheme aims to provide 75% of minimum wage salaries for all new jobs created for younger, largely unqualified workers in growth sectors like tourism, IT, and green businesses, and medicine. As part of that plan, 18,000 new public school teaching positions will also be filled over the next two years—partially fulfilling another Hollande campaign pledge. But since the vast majority of potential employers targeted under the plan are–like schools–state-funded organizations, critics say the new posts will be de facto 100% taxpayer-financed make-work activities scarcely compensating for thousands of jobs being slashed in the private sector.
While certainly better than nothing, new jobs created under Hollande’s plan are also unlikely to reverse the steady rise in French joblessness–whose current national level is around 10%, and 23% for people aged 25 or under. Meanwhile, the efficiency of that and other French government investment programs is sure to come under scrutiny. Hollande’s presidential campaign promised to re-establish a balance between deep austerity measures imposed to address Europe’s debt crisis, on one hand, and badly needed stimulus spending to kick-start stalled economic growth.
In June—backed by Italian Prime Minister Mario Monti and Spanish Premier Mariano Rajoy—Hollande appeared to score a victory against austerity hardliners like German Chancellor Angela Merkel, when a euro zone summit approved $162 billion in stimulus spending to offset previously agreed austerity demands. But critics claimed that redeployment of previously budgeted European funds would use far too little money and far too slowly to have any real economic impact. And indeed, three months later, most signs indicate Europe continues sliding back towards recession. Even Germany and France—Europe’s largest, and most robust economies—are grinding to a halt.
Hollande’s new policies seek to reverse that slump—and quell criticism he’s failed to apply stimulus cures at home that he earlier prescribed for the rest of Europe. But spending is the easy part of the challenge he faces. Hollande’s government must also find $37.5 billion in spending cuts or new income to get the 2013 budget deficit down to the pledged 3% target. Though part of that will be achieved through additional tax hikes—including Hollande’s proposal to increase income taxes on people earning over $1.25 million to 75%–declining growth projections mean the French government can expect less income into state coffers next year than it had planned. The main effort in meeting deficit targets, therefore, will almost certainly come from cutting the same kind of social programs the new 150,000 job scheme will join.
That likelihood has sparked calls from Hollande’s left—and within his own Socialists ranks—for the president to live up to his own anti-austerity campaign messages, and ease up on budget slashing long enough for France’s economy to rebound now that he’s making considerable progress in trimming its budget deficit. Better missing targets by a year, the argument goes, than risk a return to recession. So far Hollande appears determined to try and meet his European obligations, while also finding funds for stimulus spending too.
That’s a foray into rock-and-hard-place territory that may end up placing Hollande in a painful political pinch, as pressure mounts from his right and left to choose one remedy or the other. Just as confounding, public disquiet over his leadership and policy choices will likely continue growing until fleeting signs of economic improvement finally materialize. The hard reality for Hollande is France may want change now, but it wants recovery even faster.