David's Thoughts on French Elections 2012

The two rounds of the French Presidential election occurred in April, with the only surprise being the closeness of the vote in the second round.   In June France then votes in two rounds for members of Assembly. 

Contrary to popular opinion in the US, France is a conservative country.  In the last 60 years, France has seldom had a Socialist President or a socialist majority in Assembly.  However, like Americans, the French people are loath to give up any of their generous social benefits.  These have included retirement at age 60, a 35-hour workweek, and very low-cost medical care.  With budget problems and an ageing population however, changes are inevitable. Last year then-President Sarkozy pushed through an increase in the retirement age to 62, setting off protest demonstrations throughout the country.  One reason for the reaction was that the changes were to take place almost immediately, impacting people who had assumed that they would be retiring in a year or two.  When Social Security retirement ages were raised in the US many years ago, no one was impacted for almost 30 years, so there was no real controversy. 

Nicolas Sarkozy

This change in the retirement age plus President Sarkozy’s mercurial, somewhat abrasive personality, undoubtedly contributed to his defeat at the polls in April.  The current financial uncertainty also led some to look to new leadership.  Note that these are some of the same factors that contributed to Barack Obama’s win in 2008.

The official picture of President François Hollande

The new Socialist President Hollande promised while campaigning to roll back the retirement age to 60 for ‘qualified workers’  This proved to affect very few – only those who had started work at 18 and worked the required number of quarters.  He has ordered an audit of France’s finances, with results to be ready AFTER the Assembly elections.  It is widely expected that he will announce that he is ‘shocked, shocked’ at France’s financial state and that therefore, changes that he wanted to make to improve services will, quel dommage, have to be put on hold while France’s financial house is put in order.   Like in the US, the financial situation will have to be addressed in order to put the country on more of a ‘pay-as-you-go basis’; an ageing population with fewer workers and more demand for services is accelerating the crunch between income and outgo.   In spite of fears on the right and in the business community of what a Socialist government might do, I believe that they will for the most part act responsibly, if for no other reason in that they have few options.