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French prime minister unveils "Macron II" reform drive

reuters | 14 Days

PARIS (Reuters) - France will reduce unemployment benefits for high earners and offer incentives to those who work beyond normal retirement age, two key planks of a renewed reform drive by President Emmanuel Macron after months of “yellow vest” protests.

FILE PHOTO: French President Emmanuel Macron attends the International Labour Organization's annual labour conference in Geneva, Switzerland June 11, 2019. REUTERS/Denis Balibouse

Prime Minister Edouard Philippe unveiled the measures in an address to lawmakers that included commitments to put the environment and social justice at the heart of policymaking between now and the end of Macron’s mandate in 2021.

Macron, 41, swept to power two years ago on a centrist platform, shattering the traditional mainstream parties on the right and left with a promise to liberalize France’s regulation-choked economy, create jobs and clean up politics.

While his early reform drive faced protests by unions and the past six months have seen weekly unrest at the hands of the “yellow vest” movement, French unemployment is now at a 10-year low, investment at a 12-year high and purchasing power is rising, Philippe said to cheers from ruling party lawmakers.

The economic data may be pointing in Macron’s favor, but a combination of tax cuts for big business and the wealthy, reforms to loosen labor laws and the perception the he is arrogant have made the former investment banker unpopular among blue-collar workers and others struggling to make a living.

Philippe acknowledged errors had been made. But he said it was time to relaunch Macron’s reform agenda with what he called an “Act II”, a tag that echoes the “yellow vests” and their numbering of each weekend of protest with Roman numerals.

Philippe said his government would create incentives for the French to stay in work longer and reiterated his intention to simplify France’s unwieldy pensions system to make it fairer.

“As the president said, we must work longer,” Philippe said in a speech setting out the policy priorities. “We will maintain the possibility to retire at 62, but we will define a pivot age and incentives to work longer,” he said.

On unemployment benefits, Philippe said allowances would be scaled back for high earners who lose their jobs, and that he would put an end to some former employees receiving monthly benefits that exceeded their monthly salary.

“Social justice means making sure it pays to work,” he said.

Macron said last week the “yellow vest” crisis had hit just as he went through a “death valley” phase: when the first reforms had been unveiled but before they had had a chance to yield results or show their benefit.

Since it began last November, initially in opposition to fuel-tax increases before morphing into a wider anti-Macron protest, the “yellow vest” movement has weakened markedly, plagued by infighting and misdirection. From more than 300,000 people in the first weeks, now barely 15,000 turnout.

While still low, Macron’s popularity has rebounded, up five points to 32% in the latest Elabe poll for Les Echos newspaper, a level unseen since last summer.

“Our country needs to transform itself. Our enemy is not action, it is the status quo,” Philippe told lawmakers.

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