Sarkozy plans to save France

by making it more like Germany

France: As the German economy shines, next door France plunges into recession, shedding jobs and losing its top credit rating. But President Nicolas Sarkozy has a plan to save the country, by making it more like Germany. The right-wing leader will on Wednesday host a “social summit” with unions and employers to try to make France's job market more flexible and halt rising unemployment ahead of presidential and parliamentary elections this year.

Sarkozy is hoping he can emulate the so-called Hartz labour reforms of 2003 to 2005, which are seen as having helped Germany escape the economic crisis currently gripping most of Europe.

But this is just one of the many pages that France hopes to borrow from Germany's economic textbook.

Earlier this month Sarkozy's government vowed to to cut payroll charges on employers and workers to try to make French firms more competitive, and to recoup the revenue mainly by raising value added tax.

The countries with this so-called “social tax” most cited by the government are Denmark and Germany, where it was introduced in 2007. Budget Minister Valerie Pecresse said it was worth copying Germany's move to reduce labour costs because this had enabled France's neighbour to reduce unemployment and remain Europe's biggest exporter despite the crisis.

Sarkozy also hopes to follow Germany's lead and introduce a “golden rule” for French government budgets, which would oblige future governments to borrow only to invest and not in order to fund current spending.

Sarkozy occasionally has spats with his German counterpart Angela Merkel.

They have had seriously different ideas on how to resolve the European debt crisis, for example, and Sarkozy has most recently irked Merkel by vowing to go it alone in introducing a financial transaction tax. But the French leader clearly thinks his country has a lot to learn from a neighbour with which it has fought three wars in the past century and a half.

Jean-Louis Beffa, former boss of French building materials giant Saint-Gobain and author of “La France Doit Choisir” (France Must Choose), which argues the country must change its economic model to survive, agrees.

AFP