Tuesday, March 5, 2013


First retirement, now overtime. Yes, two of Sarkozy's signature reforms, attacked by Hollande in his successful presidential campaign and rolled back or modified once he took office, are back in the news. On retirement reform, it seems that the continuing crisis will force the Socialist president to retreat, indeed to lengthen the working life even more than Sarkozy did.

And now the repeal of tax rebates on overtime pay has many of the 9 million workers who benefited from the measure up in arms. This, too, was predictable, even though the finagling with overtime was in large part a failure: it proved very costly to the state without triggering a surge of new hires, as it had been intended to do.

Yet even bad policies can be popular, and Sarkozy's overtime policy was popular with those who reaped the reward. For the most part they were comfortably employed insiders, who saw their pay envelopes fattened as employers took advantage of the tax benefits.

One feels for Hollande. Clearly, an unsuccessful policy deserves to be rescinded, but making good on the promise seems to be costing him even more precious support at a time when his approval rating is already testing new lows. Although it is tempting to try to plug the hole in the state budget with some of the €9 billion saved by repeal, some of that money will now need to be used to placate the angry losers.

It would be best if some nice "Keynesian" use could be found for the money. It would be more likely to be spent, for example, if it were redirected to "outside" workers rather than the "inside" ones who inadvertently albeit predictably became the chief beneficiaries of the Sarkozy reform. But as Sarkozy discovered, such precise targeting is not easy to engineer.


Anonymous said...

The goal never was to trigger new hires, but rather to increase salaries without salary increase (salaries in France are quite low for a developed country).
The result was to cut off temporary hiring and freeze salaries.
In the article below, you see that the first result of abolishing the law was a pay raise for the waiters but a pay cut for the truck drivers (who work overtime... over the legal limit, apparently - and certainly from their own accord.)
As for the teachers, the system was put in place to offset the hiring freeze, and only worked partially (the only teachers who really could take on more overtime than before were those in the best situations; in harder schools, 2 hours overtime was the most they could manage, as this means a lot more hours in prep). The result is that there will be even fewer volunteers and thus not enough teachers in September 2013. trhe fix here is easy, more "real" teachers, but apparently they're having trouble hiring. (With shortages in Maths, English, and French, so if you're an English speaker in France....)
Do we know scientifically what professional categories were the first beneficiaries? How many are from the categories listed in the articles? How many are in the 1000 to 1500 euros/month category, especially?

Anonymous said...

* I meant: to increase take home pay whithout increasing base salaries..

The World Is Gone And I Am A Stage said...

France is socialist

and I don't understand how socialism beats capitalism when it's the USA a capitalist country is/was the most successful nation in the world. but now of course we have obama..