There are several reasons to question whether an election victory for François Fillon would bring a decisive break with the past, Simon Nixon writes
PARIS—The French have always prided themselves on doing things differently. Now, just as the rest of the world appears to be turning its back on globalization, is France poised to embrace neoliberalism?
François Fillon, winner of the center-right Républicains’ primary Sunday—and now the presumed favorite to win next year’s presidential election—is an unabashed admirer of Margaret Thatcher who promises radical overhauls of the state.
Mr. Fillon campaigned for his party’s nomination on a platform that included a pledge to cut 500,000 public-sector jobs, slash public spending by €100 billion ($106 billion), cut corporate taxes and scrap France’s notorious 35-hour workweek. What is more, he says that if elected he will do so by September.
If France really is poised for a free-market revolution, many would say the moment is long overdue. The country has proved resistant to economic overhauls for more than 30 years. As the U.S. and U.K. liberalized their economies under Ronald Reagan and Mrs. Thatcher, France turned leftward under François Mitterand. When Germany overhauled its welfare system over a decade ago, France failed to follow. The result is an economy in which the state spends 57% of gross domestic product, of which more than half consists of welfare and other transfers.
Meanwhile, France’s potential rate of growth is widely estimated at less than 1% a year, held back by an inflexible labor market that deters investment and among the lowest hours worked per employee of any European economy.
Yet there are several reasons to question whether this election will bring the decisive break with the past——the rupture that has so often been promised but never delivered, not least by Mr. Fillon’s former boss, ex-President Nicolas Sarkozy .
The first is that France in 2016 is a far cry from Britain in 1979, when the trash went uncollected, the dead unburied, and the economy was crippled by strikes that limited work to a three-day week. At the time, the U.K. government had to ask for help from the International Monetary Fund.
In contrast, the French economy is expected to grow by 1.4% this year; its public services may be inefficient but enjoy high public support; and thanks to European Central Bank bond-buying, France isn’t under market stress. In short, it faces little internal or external pressure for reform.
Second, Mr. Fillon doesn’t possess the kind of detailed plans for public sector reform that Mrs. Thatcher, then Britain’s prime minister, could bring to the government in 1979. There is no network of think tanks producing high-powered blueprints for a supply-side revolution.
Mr. Fillon’s plan to shrink the public sector may make sense for a country that employs 90 civil servants for every 1,000 inhabitants, compared with just 50 in Germany. But his plan rests on a hiring freeze rather than overhauls of the way that public services are delivered. To hit his target, Mr. Fillon would have to commit not to replace nine out of 10 public-sector retirees for five years, which many observers consider implausible.
ENLARGE Third, critics say that Mr. Fillon’s proposal fail to address a core problem in French society: a growing split between insiders and outsiders.
The French statist model has traditionally prioritized powerful vested interests including public sector-workers, large corporations, members of trade unions and older workers who tend to be beneficiaries of highly protected permanent contracts over the interests of the self-employed, small- and medium-size businesses and younger workers who are often forced to settle for insecure temporary contracts.
Mr. Fillon’s primary focus is on fiscal measures. That may appeal to his party’s conservative base who feel overtaxed, but without radical overhauls to labor laws and welfare, it will do little to boost the life chances of alienated outsiders.
That points to a fourth concern: whether Mr. Fillon’s plan is politically salable—or even deliverable. Some in his own party fear that his plan could open up political space for a centrist candidate in the first round of voting in next spring’s presidential election, whether from the Socialist party, depending on whom it chooses as its candidate, or former Economic Minister Emmanuel Macron, who quit the government to run as an independent campaigning for economic reforms.
Mr. Fillon’s candidacy could even drive public-sector workers into the arms of the National Front’s Marine Le Pen in the election’s second round. Others fear Mr. Fillon’s proposed shock therapy after the election would invite the kind of public-sector strikes that have killed previous overhaul efforts.
Meanwhile Mr. Fillon’s plans looks sure to run into resistance from Brussels. By his calculation, his proposed tax cuts would result in a deficit of 4.7% of GDP in 2017, far above the 2.7% target that Paris agreed upon with the European Commission earlier this year. Mr. Fillon argues that Brussels would allow him this fiscal flexibility to reflect his proposed structural reforms. But Brussels has already twice extended the deadline for Paris to bring its deficit below 3%. Without deep overhauls that go far beyond mere hiring and pay freezes, it is hard to see why it would do so a third time.
If Mr. Fillon is serious about transforming France, he first needs a credible plan.