Can Macron avoid the Sarkozy trap?

Imagine a young French president, elected on a platform of deep economic reforms of pensions and labor legislation. After the first proposals are unveiled, a wave of paralyzing strikes sweeps across the country throughout fall of the election year. The young president, still at the beginning of his mandate, ultimately caves in and resigns himself to managing France’s decline instead of reversing it.

That’s what happened to President Nicolas Sarkozy 10 years ago. The election of Emmanuel Macron in May this year and the large majority he secured in the National Assembly last month have opened a small window of opportunity for radical economic change. But if he doesn’t seize it, Macron will fall into the same trap as his predecessor.

In 1989 Poland, the first democratically elected government put a wholesale reform package in place in just three months, essentially turning a centrally planned economy into a market-based one.

The author of the reforms, Leszek Balcerowicz, said that the sudden fall of the communist regime triggered a short period of “extraordinary politics,” during which opponents of reforms were not yet fully mobilized. Waiting, or trying to roll the changes out gradually, risked empowering their opponents and ultimately derailing the process — as happened in Ukraine or Russia.

Given the sluggish schedule, even politicians within Macron’s own party are bound to come under pressure to water the reforms down or derail them altogether.

Macron’s shock-and-awe victory and the defeat he dealt to France’s large traditional parties are similar in one important way to the dislocation caused by the fall of communism: The period of “extraordinary politics” is going to be extremely short.

It is not clear that Macron appreciates the urgency. The government’s labor code reform, for instance, was adopted by the National Assembly on July 13 and awaits a vote in the Senate. Its primary purpose is to change the rigid rules around collective bargaining, bringing in more flexibility.

It should impose a ceiling on redundancy payments and make it easier for multinational companies to terminate employment on economic grounds. Currently, the law requires evidence of poor economic performance, not just from the French branch of a multinational firm but also from its branches in other countries.

But there is a catch. Even if approved by the Senate and signed into law, the new legislation does not actually do any of those things. It merely gives the government the authority to change the relevant areas of the labor code by executive orders, which are to be presented to “social partners” by the end of August. Superficially, the legislation appears to give the executive a strong mandate to proceed with labor market reforms by fiat. However, it also signals that the depth of those reforms is still negotiable.

Similarly, the plan to consolidate different social security levies into one, resulting in a substantially lighter effective tax rate on labor, is only to be included in the proposed 2018 budget, to be unveiled in the fall. An even more contentious proposal, to eliminate special regimes for pensions and make pensions more explicitly contribution-defined, will not be subjected to a vote until 2018.

Such a slow pace is risky. France’s loudest anti-reform trade union, General Confederation of Labour, is already preparing for a day of mobilization on September 12 over the labor market reforms. Given the sluggish schedule, even politicians within Macron’s own party, La République En Marche, are bound to come under pressure to water the reforms down or derail them altogether.

A stronger, more assertive France would be a good thing for the world.

Macron is clearly an extremely effective political operator. He single-handedly turned the French political system upside down and marginalized political parties that had dominated French politics for decades. He seems to be the only European leader who can handle U.S. President Donald Trump — a man most people expected to be his nemesis. The meticulously choreographed displays of French grandeur, including of its presidency, hint that he would like France to resume its leadership role in the European Union and retake its status as a great global power.

A stronger, more assertive France would be a good thing for the world. But there is only so much geopolitical weight that can be thrown around by an economy growing at 1.4 percent annually, with a youth unemployment rate over 21 percent, and a public debt level close to 100 percent.

Here’s to hoping that Macron understands that — and that he can avoid the pitfalls that undid the efforts of his reform-minded predecessors.

Dalibor Rohac is a research fellow at the American Enterprise Institute. He tweets at: @DaliborRohac.