PARIS, July 11 — France’s new Socialist government has lost no time changing from Dr. Jekyll into Mr. Hyde. New austerity measures will come hard and fast in dealing with capitalism’s crisis which essentially will be to tax the workers — suffering a 17.3 percent unemployment rate — to help the rich. A combination of tax hikes mainly on the working class, wage freezes, pension cuts and reducing employer contributions to the social security system all will help the bosses maintain profits and competitiveness. And the union leaders will play a leading role in selling this to the working class.
Taxes, Cuts Hit Workers
One of newly elected President François Hollande’s main advisors said, “We can’t wait any longer…. We have to strike hard right from this summer, when the law rectifying the 2012 budget is voted; and this autumn, when the 2013 budget is voted….to drive home the nail by increasing taxes and really cutting expenditures.”
Between now and 2013 the government must come up with 40 billion euros (USD $50 billion) to keep France’s promise to the European Union to bring the budget deficit down to 3%. On July 4, 7.2 billion euros (USD $9 billion) in additional taxes were announced, 53 percent of which will fall on households.
In 2013, the government plans to increase the generalized social contribution (CSG) from its present 7.5 percent by another two to four percent. Rich and poor pay the same rate to the CSG — which finances the social security system — so workers will pay several hundred additional euros annually in CSG. All this increases the income gap between rich and poor, increasing the power of the capitalist class.
This tax increase could generate 20 to 40 billion euros in revenues, reducing the government budget deficit and ensuring that France can pay back its $87.9 billion sovereign debt to the capitalists — with interest.
Meanwhile, reducing employer contributions to worker’s social security means taxpayers (mainly workers) will make up the difference via the CSG tax. French bosses will use this cut in labor cost in two ways: a combination of lowering the cost of production, increasing their competitiveness on the world market and increasing their rate of profit.
President Hollande is “reconsidering” his pre-election promise to raise the income tax rate on millionaires, which probably means junking it.
Still, all this won’t be enough to reduce the government budget deficit, leading to more budget cuts in 2014-2017. The Socialists will continue the freeze on government expenditures (except for financing the sovereign debt and retirement pensions).
Freeze Wages, More Layoffs
Other foreseeable measures include a freeze on government workers’ wages and on government financing of universities, research institutes and the unemployment agency and layoffs of government workers, resulting in “blood on the walls of the ministries” said one minister.
The Socialists also intend to cut pensions. The last two “reforms” raised the retirement age. Only 60% of workers aged 55-59 are actually working. Raising the retirement age for many workers means increasing the time they spend on unemployment or welfare before they retire, and lowering the pension they get when actually retiring.
Meanwhile, the economic crisis continues unabated. In May, 17.3% of the active population was unemployed or underemployed, including part-timers looking for full-time work and other categories of the jobless. This falls most heavily on immigrant black and Arab workers from Africa who, because of racist discrimination, suffer even lower wages and higher joblessness.
In this dire situation, the sellout union leaders will be fronting for the ruling class, selling the austerity to the working class. “We’re on a new course!” exclaimed Bernard Thibault, leader of the CGT, France’s largest union. All the union misleaders are struggling for a place on the government bandwagon. (The Socialists made a show of listening to the union leaders but carefully avoid discussion of any unpopular measures.)
Union Hacks Dance to Bosses’ Tune
Different union leaders were assigned the role of “officially” putting forward Socialist proposals, especially increasing the CSG tax as the “only acceptable way to go.” In payment, they’ll get two carrots: Union officials will be paid to sit on the newly created General Commissariat for Forecasting, and union officials who are government employees will get a civil service promotion when they retire from union activity.
The whole capitalist election circus has enabled French bosses to continue to impose their policies. Indeed, with their “popular mandate” and the support of the union hacks, the “lesser-evil” Socialists can push through austerity measures even more severe than the worn-out Sarkozy government could ever have done.
Austerity policies and tax hikes are inevitable under capitalism, which staggers from one crisis of over-production to another. For workers, communist revolution is the only road to a decent life.