De jure, François Hollande is the most powerful man in France. De jure, he also enjoys the support of the socialist majority in the National Assembly and the Senate and  retains the backing of a number of regions, major cities and communes. Yet de facto, after seventeen months of his five-year term, he has almost completely forfeited his presidential authority.

Mr. Hollande’s popularity has in fact shrunk both further and faster than that of any other president since the founding of the Fifth Republic 55 years ago. In an opinion poll conducted by the Ifop Institute and published by the Journal du Dimanche on November 17th, Mr. Hollande’s approval rating is alleged to have fallen to 20 percent. His unpopularity surpasses the previous record of 22 percent, achieved by Mr. Hollande’s mentor and predecessor, President François Mitterrand, in December of 1991.

Image courtesy of Parti Socialiste © 2012, some rights reserved.

Image courtesy of Parti Socialiste © 2012, some rights reserved.

Pourquoi?

Many French citizens are understandably upset about Mr. Hollande’s failure to uphold his campaign promises and his inability to ease what political commentator Agnès Poirier has referred to as their “existential angst”.

Most are simply upset because they believe Mr. Hollande tackles the wrong problems and proposes the wrong solutions. On November 11th, he was publically booed by protesters during the Armistice Day memorial ceremony and protesters adamantly called for his resignation. As a consequence, seventy people were arrested for demonstrating without authorization.

His handling of the Leonarda Affair, in which a female Roma school student was forcibly deported from France, gave rise to large student protests and fierce internal debates within the government. The discovery that his former finance minister, Jérôme Cahuzac, had been hiding undisclosed and untaxed assets worth 600’000 Euros in a Swiss bank account for twenty years did not exactly appease public opinion either.

Modern-day barricades

Yet not only has public opinion turned drastically against Mr. Hollande, but his policies are actively obstructed. Since July of this year, 320,000 businesses have stopped paying their social security dues.  More recently, on November 16th, thousands of trucks and lorries blocked the motorways and country roads of Brittany in protest against the écotaxe on all domestic and foreign transport vehicles. Set to be levied as of January 2014, the introduction of this tax has been postponed indefinitely.

Similar demonstrations have been undertaken by France’s two million horse owners. The so-called équitaxe was set to increase the value-added tax on the purchase of horses from 7 percent to 20 percent. The French football league has been equally outraged by Mr. Hollande’s 75 per cent income tax on millionaires and has threatened to go on strike. Paris Saint-Germain alone would face a tax increase of 20 million Euros. Similarly upset are industrial tycoons, bankers and film stars throughout France. It appears from all of this that the French are right to be upset and confused by the unsystematic manner in which Mr. Hollande has sought to appease their shared main grievance: The national economy.

It’s the economy…

The French economy is currently in its third recession with economic growth having incurred a decline of 0.1% this summer. It is running a substantial deficit and the yields of its sovereign bonds have been low for quite some time now. The latest Global Competitiveness Report ranks France 21st out of 144 assessed jurisdictions. In 2010, it still ranked 15th. On November 8th, Standard & Poor’s degraded its credit-worthiness from AA+ to AA.

Sadly, this measure did not come unexpectedly. French unit labour costs have increased by roughly 30 percent since 1999, such that on average, one working hour costs 34.20 Euros in France, whereas in Germany it only costs 30.40 Euros. Partially as a consequence of this, the unemployment rate is now above 11 percent. Meanwhile, as The Economist has relentlessly pointed out for months now, the French state “eats up 57 percent of GDP”.

… and it has been like this for quite some time

Clearly, Mr. Hollande’s strategy to revitalize the French economy has been as effective as efforts to bolster his own popularity. The more attentive commentators have been quick to point out the correlation between the two. Yet it should be stressed that the economy was already faring badly and that the French were already suffering from “existential angst” under Nicholas Sarkozy. It was because of this that they voted Mr. Hollande into office in the first place.

In the meantime, Mr. Hollande has taken several tentative steps towards reforming, and not merely constraining the legal framework surrounding the French economy. He has proposed a series of labour law reforms. Yet on account of France’s excessively powerful unions, these measures have been severely stifled. He has also promoted reforms to incrementally extend the number of years during which people are obliged to pay into pension insurance schemes to 43 years. This idea, in turn, was only recently turned down by the Senate. It also lacked the courage to challenge the exceptionally low retirement age of 62.

Back in 1983

Overall, therefore, Mr. Hollande’s approach to the economy has been too ill-coordinated and too timid, to the extent that powerful established interests and vociferous public protests have repeatedly obstructed their implementation. This in turn has led to frustration among the wider population and to Mr. Hollande’s disastrous popularity ratings.

If Mr. Hollande is to resuscitate his presidency, he should stage a course reversal not unlike that of François Mitterrand in 1983, which marked a decisive break from his socialist approach to the economy at the time.

He should abolish the 35-hour working week beyond re-institution. He should lower taxes and he should force the labour market into greater flexibility. To do this, he should demonstrate the leadership skills he campaigned on and deploy the political courage that the French expect from their president. Whether these measures would raise his popularity ratings to those of Mr. Mitterrand in 1991 remains to be seen.