May 14, 2007 / 8:51 AM / 12 years ago

France's Sarkozy faces battle over reforms

PARIS (Reuters) - French president-elect Nicolas Sarkozy has an ambitious agenda for change but he faces a tricky balancing act if he is to avoid the bitter protests that have greeted previous reform efforts in France.

France's newly-elected President Nicolas Sarkozy attends a ceremony to pay tribute to the abolition of slavery at the Jardin du Luxembourg in Paris May 10, 2007. REUTERS/Philippe Wojazer

Sarkozy takes office on Wednesday and intends to begin immediately on a 100-day programme that will shake up labour, education and tax law, tighten rules on young offenders and look for a solution to the impasse over the European constitution.

He will sweeten the medicine with measures to boost spending power, including a law to make mortgage interest payments tax deductible and he has pledged to include unions in discussions.

The unions themselves have held back from direct confrontation but the head of the powerful CGT union warned last week that Sarkozy’s large election victory did not give him “legitimacy for just anything”.

Students have already protested his plans to grant more financial autonomy to universities and allow more selection in admitting students but there is likely to be more serious opposition from organised labour.

“If he carries out half of what he has promised then there will be all sorts of problems,” Jacques Attali, a close aide to former Socialist president Francois Mitterrand, said last week.

Among the chief measures Sarkozy is planning is a rule that would force public sector transport workers to provide a minimum service during strikes and a new, more flexible labour contract.

The contract, which Sarkozy says will encourage employers to take on more staff by making it easier to lay workers off during downturns, is seen as one of the key elements of his programme but also carries the greatest risks.

DIFFICULT

“It will be very difficult to introduce this new labour contract,” said Nicolas Sobzak, senior European economist at Goldman Sachs in London.

“The question is will he be able to strike a deal with unions and what will he give them in exchange?”

Sarkozy himself is well aware of the potential risks after last year’s pitched street battles over plans to introduce a new youth jobs contract that would have offered weaker protection to younger people who had just joined the workforce.

Under outgoing President Jacques Chirac, entrenched opposition from unions and other protesters defeated several efforts to reform pensions ands labour law.

The new president is proposing to meet unions after next month’s parliamentary elections to discuss the contract and is expected to hold preliminary contacts on Monday.

But CGT leader Bernard Thibault made clear last week that he was not enthusiastic about the notion of “flexisecurity” supposedly embodied in the contract.

“For us, the right to work is not a hindrance to jobs. Employees need security in a changing economy,” he told Le Monde newspaper in an interview.

An early test will come with Sarkozy’s plan for minimum service during strikes, a measure whose symbolic importance in limiting union rights outweighs the practical impact it would have on the economy.

Unions have already voiced their opposition but the new president will be relying on the political clout of his solid election win for a deal.

“I would say at this stage I’m moderately confident, even though there are often a lot of bad surprises in French politics,” Sobzak said.

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