French economy minister eyes unemployment benefits reform

Philippe Huguen, AFP | An unemployment office in France

France’s new economy minister, Emmanuel Macron, said Sunday that the country’s costly unemployment benefit system needed further reforms, sparking a debate that has divided the ruling Socialists and angered powerful trade unions.


France is under pressure to implement deep structural reforms after acknowledging it would only bring its budget deficit into line with EU rules by 2017, two years later than promised, due to anaemic growth.

"There should be no taboo...The social benefits system has a 4 billion euro deficit, what politician could be satisfied with this," Macron told Sunday's Journal du Dimanche.

"There was a reform, but it is not enough", he told the weekly.

France’s Prime Minister Manuel Valls sparked outcry on the left last week after suggesting more needed to be done to encourage the unemployed back into work.

“It’s up to unions to get things done,” said Macron, a former banker and one-time economic adviser to President François Hollande.

“But as the government funds the system, it can also take control of the situation if there are deadlocks in negotiations,” he said, adding the topic would not go away.

On Wednesday, France submits to the European Commission a 2015 budget that sees the public deficit falling from 4.4 percent of output this year to 4.3 percent, only falling below the EU-mandated threshold of 3 percent in 2017.

France had previously promised EU partners it would bring its deficit back into line by next year, having already won an extension from 2013. The country’s spending watchdog doubts the new targets can be met.

France’s unemployment rate is stuck above 10 percent despite billions of euros spent on subsidised jobs, and the country is under pressure to show it can implement reform.

Reflecting the fight Valls faces to get change past his own party, Socialist National Assembly speaker Claude Bartolone said Macron’s reform proposals were a fantasy, and that it was too early to discuss measures in public.


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