THE French Socialist government has said it will raise Value Added Tax and cut public spending, kicking the working class and the poor in the teeth, in order to fund tax credits, and boost big business profits to try to persuade the bourgeoisie to keep their plants in France.
Hollande’s 20bn euros (£16bn) plan follows a government-commissioned report by industrialist Louis Gallois. The former EADS chief advocated shock therapy to cure the country’s industrial decline. French payroll taxes must be cut by 30 billion euros over the next two years.
Gallois was joined by the IMF. This said in its annual review of the French economy that France should ease employment laws to make it easier to both hire and fire workers, as well as cut payroll taxes to encourage employers to hire more staff.
Prime Minister Jean-Marc Ayrault said the government was adopting nearly all the measures recommended in the Gallois report. The Socialist Ayrault said ‘ambitious and courageous decisions’ are required, adding: ‘France needs a new model.’
Gallois insisted that laws should be changed to make the creation of start-up businesses easier. His number one proposal was to cut French payroll taxes by 30bn euros (£24bn) in two years, handing £24bn to the bourgeoisie and, consequently, leaving a huge hole in the government budget that can only be dealt with by the type of savage cuts that the ousted Sarkozi advocated.
The government has responded to the IMF and Gallois with undertakings to slash public spending by 10bn euros and raise another 10bn in higher basic food prices by increasing VAT from 19.6% to 20% from 1st January next year. This will fund the tax credits for the bosses.
France now accounts for just 13% of eurozone exports, compared with 17% a year ago, and its unemployment rate stands at 10.2%, as against Germany’s 6.9%.
The IMF has drawn up for the French Socialist government an entire programme of action to make the French workers pay for the crisis of the bourgeoisie. It said that the Socialist government must make working hours more flexible, freeze the minimum wage and slash unemployment benefits. Starving the working class and the poor is to be done so as to ‘provide a greater incentive to look for work’.
The French economy is second only to Germany in Europe. The IMF has cut its growth forecasts for the French economy to 0.1% this year and 0.4% in 2013, from 0.3% and 0.8% respectively. It has warned the Socialist government that it must cut wages and taxes or fall behind Italy and Spain. Spain has 25% unemployment and 52% youth unemployment.
The IMF’s considered verdict on France is: ‘The growth outlook for France remains fragile reflecting weak conditions in Europe generally, but the ability of the French economy to rebound is also undermined by a competitiveness problem.’
The IMF instructed that ‘combative’ rather than ‘co-operative’ relations between trade unions and employers, high social security contributions and a system where hiring and firing is very difficult all add up to a costly labour market in need of reform.
It added: ‘The loss of competitiveness predates the crisis, but risks becoming even more severe if the French economy does not adapt along with its major trading partners in Europe, notably Italy and Spain which, following Germany, are now engaged in deep reforms of their labour markets and services sectors.’
There is no doubt that the massive Greek, Spanish and Portuguese strikes and demonstrations will shortly be joined by millions of French workers taking to the streets.
The socialist revolution is now stalking Europe, and organising its victory through building revolutionary parties, in every country, is now the main issue.
