These 5 numbers explain why the French are in the streets – The New York Times


PARIS – The president of France, Emmanuel Macron, is facing the toughest crisis in his leadership after three weeks of violent protests across the country. The protesters of the "yellow jersey" have asked that the government give financial relief to a large part of the population that is struggling to make ends meet.

Prime Minister Edouard Philippe tried to calm the fury on Tuesday by suspending a six-month tax hike on fuel, reversing a policy that triggered the uprising.

But it is not clear that this single concession can free the streets.

The movement of the Yellow Jersey – whose followers wear or show high visibility vests used in emergencies – has turned into a collective protest for the deeper problems that have plagued France for years: the decline in living standards and the erosion of purchasing power. Both worsened in the aftermath of the long financial crisis in Europe.

Here are some numbers that explain why France broke out.

The rich have become richer, as the top income earners recorded income gains of around 3 percent in the year. An increasingly generous managerial pay for the very high earners helped to scale the ladder.

French workers are even better than those in Italy, where the growth of real wages Since 2016, real wages have fallen by 1.1 percent between the fourth quarter of 2016 and 2017, according to the Organization for Economic Cooperation and Development.

But while real hourly wages are rising in France, growth has come slowly, even more since the end of the eurozone debt crisis in 2012.

France is the third largest economy in Europe after Great Britain and Germany, and the sixth largest in the world before adjusting to inflation. Visitors to Paris may come up with the impression that the pomp of the French capital means that the rest of the nation is just as well-off.

But French economic growth has been stagnant for almost a decade during the long debt crisis in Europe and only recently has it started to improve.

The quality of the recovery was irregular. A large number of permanent jobs have been wiped out, especially in rural and ex-industrial areas. And many of the new jobs created are precarious temporary contracts.

Growth is the key to improving working conditions for those who have protested. But as a nascent economic upturn before Mr. Macron took over the job, the growth has cooled at an annual rate of 1.8 percent, tandem with a slowdown in the rest of the eurozone.

The slowdown in growth makes it more difficult to solve another French problem: the large number of people without work.

Unemployment in France has been blocked between 9 and 11% since 2009, when the debt crisis hit Europe. Unemployment returned to 9.1 percent today from 10.1 percent when Mr. Macron was elected. But it is still more than twice the level in Germany.

Mr. Macron promised to lower unemployment to 7% by the next presidential election of 2022, and acknowledged that failure to do so could fuel the flames of populism.

But to do so, the economy should grow at least 1.7 percent in each of the next four years, which is by no means certain, according to the French Economic Observatory, an independent research group.

Mr. Macron tried to revive the French economy.

This year, he asked for a aggressive review of the nation's rigid labor code to help employers establish hiring and layoff rules, and circumvent long-standing constraints that discourage employers from hiring new workers. The provisions also limit the ability of trade unions to delay change by allowing the negotiation of individual agreements at company or industrial level between bosses and workers.

Those reforms have helped to design companies like Facebook and Google in France. But it could take years to show results for average workers. And the reforms have angered the workers who see a plot to strip off the hard workers' rights for big business.

As part of its plan to stimulate the economy, Macron has cut taxes for the richest tax payers in France during its first year of office, even by creating a fixed tax for capital gains.

But the focus of the tax package, and the one that has attracted the greatest anger of the demonstrators, has abolished a wealth tax that applied to many assets of the wealthiest families in France, replacing it with one that applied only to their real estate.

This has decreased by 3.2 billion euros, or 3.6 billion dollars, the amount of revenue that the state has received this year.

There has been little evidence of a stimulus effect. Instead, Mr. Macron has earned a reputation for favoring the rich – one of the biggest sources of anger among the Yellow Jersey protesters.

While high income earners enjoyed tax breaks according to Mr. Macron's tax plan, purchasing power fell last year for 5 percent of households. The majority in the middle, about 70 percent, did not see any gain or pain in any way, according to the French Economic Observatory.

Even before the yellow vests descended into the streets, Macron realized that support was fading, and his government tried to orient itself to those who had been left behind in the previous round of tax cuts.

Its 2019 budget, presented in October, will grant reductions next year worth € 6 billion for middle and low income workers. It also includes a reduction in labor costs and other professional taxes of € 18.8 billion to encourage hiring and investment.

While polls show that yellow jackets have the support of three-quarters of the population, the questions are disturbed as to how much pain the protesters are actually experiencing – or how much of the outburst can be attributed to a secular culture of demonstration against change.


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