Economic recovery plan announced at social summit

In February 2009, the government presented a €26 billion economic recovery plan. The plan includes assistance for companies in terms of cash flow and a public investment programme. The president decided to add €3 billion to the plan following the social summit. However, the trade unions are dissatisfied with the measures and planned another demonstration for 19 March.

On 2 February 2009, the government unveiled its national economic recovery plan (in French). The announcement came a few days after the trade unions staged inter-trade strike action on 29 January in order to obtain more favourable measures for employees, jobseekers and pensioners, all of whom are victims of the global economic crisis (FR0902029I).

Details of economic recovery plan

The French Prime Minister, François Fillon presented the recovery plan at an Inter-departmental Committee on the Monitoring of Change in Local Competitiveness (Comité interministériel d’aménagement de compétitivité des territoires, CIACT) (FR0512103F), alongside the new Minister tasked with the implementation of the recovery plan, Patrick Devedjan. Prime Minister Fillon stated that the plan provides ‘over €26 billion, that is, 1.3% of gross domestic product (GDP)’, highlighting that it ‘prioritises economic activity and employment’ and that ‘its impact on economic activity, employment and regional competitiveness will be perceptible as of this year.’ The plan, which includes some 45 measures and 1,000 projects, comprises the following three main sets of measures.

  • A total of €11.4 billion has been allocated to reimburse companies in order to improve their capital and cash situation and give them the resources they need to invest; this includes the early reimbursement of the research tax credit or value-added tax (VAT) from the start of 2009. The state has issued a guarantee to six major French banks and credit insurers to ensure the stability of the banking system and to provide funding for small and medium-sized enterprises (SMEs). Furthermore, €1 billion is being granted to the financial subsidiaries of car manufacturers.
  • The state will invest an additional €11.1 billion in the public investment programme, and in support for economic activity and employment. This will include support for housing, with a two-fold increase in zero interest rate loan amounts, in addition to welfare support. In relation to the latter, following the creation of the Active Solidarity Income (Revenu de solidarité active, RSA) (FR0811029I), the government will introduce an Active Solidarity Payment (Prime de solidarité active, PSA), targeting 3.8 million low income households, meaning that each family will receive €200.
  • A total of €4 billion will be invested by large public companies in order to modernise and develop the railway and energy infrastructure, and postal services.

February social summit

Following the presentation of these measures, the trade unions stated that they wanted other measures to be discussed at the meeting organised by the French President, Nicolas Sarkozy, on 18 February 2009.

Following the meeting with the trade unions and employer organisations, President Sarkozy delivered a speech (in French, 106Kb PDF) on television and radio on the same day.

President announces additional measures

The French president announced that the government had decided to allocate an additional €2.6 billion for the following groups:

  • employees who are partially unemployed – so that they receive up to 75% of their gross salary (FR0902049I) on the one hand and, at the same time, so that bankers take steps to re-examine schedules of repayment for those who have taken out loans;
  • young jobseekers who cannot claim unemployment benefit because they have not made enough social security contributions – these jobseekers will be given a one-off payment of €500;
  • low income households – a two-thirds reduction in income tax will be granted to six million low income households, and an additional €150 will be paid out in June 2009 to the three million families claiming the ‘back to school’ benefit (Allocation de rentrée scolaire, ARS).

In addition, President Sarkozy has taken up a trade union proposal and announced the creation of a ‘social investment fund which could allocate up to €3 billion for employment and vocational training’.

Having listened to the views of the social partners and discussed their expectations, the president rejected proposed solutions to the following problems:

  • purchasing power – a significant minimum wage (salaire minimum interprofessionnel de croissance, SMIC) increase had been proposed;
  • employment – recruiting more civil servants had been proposed, in addition to reinstating the administrative authorisation system for the dismissal of employee and trade union representatives.

President Sarkozy also underlined the importance of going ahead with the upcoming reforms for hospitals, sixth-form colleges, and universities and research. The reforms are still provoking major protests not only in mainland France, but also in the French overseas departments (départements d’outre-mer, DOM) (FR0903039I).

Moreover, the president intended to ask ‘company bosses who use partial unemployment or redundancy as cost-cutting measures to give up their bonuses’, which are in addition to their wages.

Trade union issue further demands

Following these announcements, the trade unions called for the government’s recovery plan, which focuses on public aid for investment, to be supplemented by measures boosting consumption. The unions regard the current solutions as inadequate and, as a result, announced another day of general strike action (in French), which was held on 19 March.

Benoît Robin, Institute for Economic and Social Research (IRES)

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