Macron’s yellow vests concessions are bound to make things worse

In light of the yellow vests protests in France, president Emmanuel Macron has made a number of concessions to the movement. However, the people involved in the Gilets jaunes demonstrations aren’t likely to be helped by those measures.

Macron’s announcement

On Monday, Emmanuel Macron made a national TV announcement addressing the “Gilets jaunes” protests, and making key promises to tackle the issues that the movement is concerned about. The French yellow vests had marched for weeks in opposition to a substantial increase in petrol taxes and a loss of purchasing power. At first, Prime Minister Edouard Philippe had decided to suspend this particular measure for six months. Macron then corrected his head of government, and suspended the measure indefinitely. And yet, despite initial concessions, the protests continued last weekend, with even more damage done during riots in Paris and Bordeaux.

Essentially, Macron caved to the more interventionist demands of the yellow vests, including:

  • Getting rid of homelessness
  • A more progressive tax system
  • An increase in the minimum wage
  • Free parking in the city center
  • Higher taxes on big companies
  • A minimum monthly pension of €1,200 ($1,369.46)

In his address to the nation on Wednesday, Macron promised the following:

  • Asking employers to give an end-of-the-year bonus to employees. This bonus will be tax-free and free of social security contributions.
  • Retirees making less than €2,000 will be exempt from the increase of social security contributions.
  • Hours worked overtime will not be taxed.
  • The continued fight for a digital tax on an EU level, in order to fight “tax evasion”.
  • Increasing minimum wage by €100 per month from 2019 on, offset by reduced social security contributions by the employers.

On that last point, Macron said that there is a “state of economic and social emergency” in the country, and the Head of State asked the government to “do what is necessary so that people can live better from their work from the beginning of next year”. “The salary of a SMIC (French minimum wage) worker will increase by 100 euros per month from 2019 without costing the employer an extra euro,” he said.

Emmanuel Macron did not specify the surrounding measures of this increase during his speech. According to a government source contacted by Le Monde, this figure of “100 euros” includes two things. First, the decrease in employee contributions in 2018, which represents a little more than 20 euros per month for a full-time SMIC employee. Then, the increase in the maximum amount of the activity bonus by 80 euros net.

According to the same source, Emmanuel Macron’s calculation did not take into account the legal revaluation of the SMIC of 1.8% on 1 January 2018 (i.e. approximately 20 euros net more). The gross monthly minimum wage is €1,498.47, or €1,184.93 net. With the automatic revaluation, it was expected to increase to €1,210 net in January

Should the yellow vests be content?

According to the French newspaper Nouvel Observateur, 43.6% of French workers work more than 39 hours per week. 28% work between 36 and 39 hours, and 28.4% work 35 hours. According to France’s labour regulations, the official work week is 35 hours. The numbers show that the group that works 35 hours without overtime and therefore wouldn’t benefit from new taxation rules on overtime work, is also the least educated one. Only 16.6% have a Masters degree or above (in comparison to 23.7% in the 36-39 group, and 59.7% in the 39+ group), and only 28.2% have a Bachelor’s’ degree (in comparison to 30.6% in the 36-39 group, and 41.2% in the 39+ group). This demonstrates that the lowest income group would be least affected by the proposed overtime work measures.. Tthe yellow vest protesters – mostly low-income and lower middle class earners – are not the people positioned to reap the benefits of these changes.

The government did suspend increased petrol taxes, but the essential problem isn’t that of taxes; it’s spending. Spending is the tax, because whenever the government pays for services, it’s individuals who have to settle the bill. They pay either through direct taxation, indirect taxation, increased debt, or inflation. The yellow vests can really only claim to seek to reform France for the better if they support reduction in France’s public spending, which is currently at a staggering 57% of GDP.

The measures announced by Macron are financed by the people who were protesting in the streets. When will they protest the spending?

This article was first published by Values4Europe.

Pictures are Creative Commons.

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About Bill Wirtz

My name is Bill, I'm from Luxembourg and I write about the virtues of a free society. I favour individual and economic freedom and I believe in the capabilities people can develop when they have to take their own responsibilities.

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