The 100-day man

Jun 9th 2005
From The Economist Global Agenda

Fast action on jobs is the top priority for Dominique de Villepin’s government

BACK to work! That was the message from Dominique de Villepin, France’s new prime minister, to a discontented electorate this week—and to his own team. In his first speech to parliament on Wednesday June 8th, he resolutely declared war on unemployment. As if to prove the point, he hauled the full cabinet in for a meeting on his first Sunday in the job. The symbolism was plain: no time would be wasted in the fight to restore jobs and confidence.

“Unemployment”, Mr de Villepin declared, is “the true French disease”. He pledged that “all the force of my government” would be engaged in “the battle for jobs”. Achieving this, he said, was not a matter of choosing between “liberal and social” but between “immobility and action”. He has promised results within 100 days, in keeping with his hero, Napoleon.

The impression of dynamism is genuine enough. France’s new prime minister runs marathons, revises speeches into the small hours, finds time to publish a book a year (including one on his hero). His team includes such energetic men as Nicolas Sarkozy (who also heads the ruling UMP party), at the interior ministry, and Thierry Breton, at finance. If he is to consider a bid for the presidency in 2007, Mr de Villepin needs results, and fast.

Yet he is pinned into an uncomfortably tight corner. On one side, social unrest still lingers after voters decisively said no to the European Union constitution on May 29th. Anything that smacks of libéralisme will meet resistance by unions and the hard left, which mobilised forcefully for a no. They threaten to take to the streets if workers’ rights are threatened.

On the other side, the unelected Mr de Villepin is in government with his chief centre-right rival—Mr Sarkozy—whom many deputies, fearful for their jobs, would have preferred as prime minister. Tensions will be hard to contain, and Mr Sarkozy has made plain that he will continue to speak his mind. Moreover, Mr de Villepin enjoys no honeymoon period. Fully 79% think he will not be able to act on unemployment within 100 days, said a poll in Le Parisien this week. And President Jacques Chirac’s popularity is in free fall: it is just 24%, says TNS-Sofrès, the lowest in his ten-year presidency.

Treading a path through this thicket, Mr de Villepin this week announced surprisingly detailed measures to create jobs. They included simplifying red tape and lowering social charges for small firms; a special incentive for the long-term unemployed to accept a job; and a new work contract that offers employers more flexibility in the first two years, while giving employees more help if dismissed. To move fast, these measures will be introduced by decree, not put to parliament.

The rest of the job plan merely expands on an existing “social cohesion plan” devised by Jean-Louis Borloo, the employment minister. It relies heavily on subsidised municipal job creation.
The scheme could dent the unemployment figures, which show that 10.2% of the workforce is without a job. But it will do little to free up the labour market. And its expansion will come at a price—an extra €4.5 billion ($5.5 billion) in 2006, said Mr de Villepin. He added that, as all extra money had to be dedicated to jobs, he would have to suspend Mr Chirac’s promised income-tax cuts. Even so, Eric Chaney, chief European economist at Morgan Stanley, says he is raising his budget-deficit forecast for 2006 from 3% to 3.5%.

Rivalry is weakening the left as well as the right. At the weekend, François Hollande, boss of the main opposition Socialists, evicted from the party leadership his number two, Laurent Fabius, along with several fellow rebels, for leading the non camp in the referendum campaign, against the party line. Mr Hollande needed to restore his authority: party members had backed a oui in an internal vote. But the expulsion carries a risk that Mr Fabius will appear a victim, and his stock may rise.

A party congress has been called for November, at which Mr Hollande is expected to seek a fresh mandate. Although not designed to pick a presidential candidate, the vote will test who can carry authority—and whether the Socialists will continue to modernise, or swing further left. Mr Fabius has a tricky calculation to make. Despite his referendum boost, his fellow rebels still distrust him. The last time he stood for the Socialist leadership, in 1990, he carried only 29% of the vote.

Political instability on all sides looks inevitable. Mr de Villepin’s government is perilously perched: vulnerable to fratricide from within, exposed to discontent from without. The question is, how long will it last? Already, Mr Sarkozy has hinted that he will not stay beyond late 2006. If French discontent cannot be defused, early parliamentary elections cannot be ruled out.

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