NCPA - National Center for Policy Analysis


September 20, 2007

In unveiling his domestic reform, French President Nicolas Sarkozy called for "a new social contract" for France. His proposed revision of French socialist tradition is nothing short of revolutionary. His ability to deliver will make or break the Sarkozy presidency, says the Wall Street Journal.

Among Sarkozy's proposed reforms:

  • Restrictions on the 35-hour maximum work week would be loosened and requirements to receive unemployment benefits would be toughened.
  • Hiring and firing rules as well as incentives to retire early would both be eased.
  • In addition, by the end of the year he plans to cut back the costly benefits enjoyed by public-sector workers.

Scaling back these benefits invites confrontation with the most powerful constituency against change in France, public-sector unions. But one of the biggest threats to Sarkozy is himself, says the Journal. In his first four months in office, the President has revealed a populist streak. He browbeats the European Central Bank to lower interest rates and sticks his nose into big business. Such interventionism harks back to old-style French economic management and is out of tune with the approach outlined yesterday.

The President's long-awaited speech sets the stage for most important political battle in his first term. Whatever Sarkozy does in the next five years, he can't claim to have succeeded unless France breaks out of its economic slumber.

Source: Editorial, "French Revolution," Wall Street Journal, September 19, 2007

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