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 Clearly, an unsuccessful policy deserves to be rescinded, but making good on the promise seems to be costing him even more precious support at a time when his approval rating is already testing new lows.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.