View from Europe: The French Disconnection

Friendly, but not friends — such is the relationship between France's new President and CFOs.
Janet KersnarSeptember 1, 2007

You couldn’t help but be puzzled by the timing. Just as France’s new finance minister, Christine Lagarde, called on the nation to “stop thinking, start working” in a July speech, her countrymen were packing their bags to begin their annual summer holidays. Both working and thinking would have to wait until la rentrée — the French term for the collective return to school and work in September.

Now that it’s September, Nicolas Sarkozy, Lagarde’s center-right boss, is once again reminding the country of the campaign mantra — work more to earn more — that won him the Presidential election in May.

What does this mean for France’s CFOs? One telling moment took place on Sarkozy’s first day in office, when he met with union heads at his Elysée Palace headquarters. It was a symbolic gesture, but he used the occasion to reinforce his campaign pledge that some minimal level of public transportation service will be maintained during national strikes. If he gets that agreement during formal negotiations with labor officials this month, it could be a start at breaking down union dominance.

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Meanwhile, Sarkozy is following through on other campaign pledges to boost the economy — loosening firing rules and cutting taxes. In a move pleasing to both employees and employers, he is even tackling the country’s controversial 35-hour workweek by allowing overtime to be exempt from taxes and other charges. This, it is hoped, will get workers working more and eventually give consumer spending a jolt.

Amid a flurry of positive news — unemployment hitting a 25-year low this summer, for example — French business seems content for the moment to ignore the other side of this outwardly probusiness President: the Gaullist who upholds the importance of the state. An unapologetic protectionist, he has already shown a willingness to defend “national champions” against foreign takeover. He has also taken a controversial swipe at the European Central Bank, criticizing its policies that have strengthened the euro against the dollar. And almost as if to reassure the country’s left that there is a limit to his free-marketeering, he waded into the debate over the EU’s draft constitutional treaty by suggesting that the reference to “free and undistorted competition” be replaced with “social market economy aiming at full employment.”

As France returns from vacation, the challenge for Sarkozy is to show that these two sides are economically and politically compatible. He has his work cut out for him.

Janet Kersnar is editor-in-chief of CFO Europe.