Unemployment, Finances, Sarkozy and Chirac

French unemployment figures have been revised upwards and now officially stand at 9.8% or 2.68 million people, a full percentage point above the eurozone level. In 2003, there were 67,000 fewer employed than in 2002, due in large measure to government cutbacks intended to help stave off a looming crisis in public finances. (The government employs one of every five French workers, meaning that one three French citizens is either employed by the government or dependent on someone who is.)

One hundred thousand government employees were laid off but this was off set by an increase in hiring among so-called fixed "contractors" (i.e. temps) — which would indicate that the number of unemployed may rise still further when such contracts begin to expire if contractor hiring isn't maintained or itself off set by hiring in other sectors. However, the FT quotes Jean-Louis Mourier, identified as an economist at Auriel Leven Securities, as saying that companies should start hiring again in the latter half of the year, thereby increasing consumer confidence.

In news related to this post: data leaked from the finance ministry indicate, also according to the FT, that the government no longer believe they can reduce the deficit (which is greater than $11 billion) to less than 3% of GDP (a Maastrict treaty requirement) for the next fiscal year.

The AFP is now reporting that newly appointed Finance minister Nicholas Sarkozy has announced an even larger freeze in public spending and requests for spending cuts to be made individually to every ministry, including an €800 million cut for Defense.

Some have remarked that, given the herculean and thankless task of fiscal reform, it's no surprise that Chirac gave the Finance ministry to his newest and brashest political rival following last month's cabinet reshuffle (see also this realvideo segment (1:10) from the BBC). Obviously, the assignment is a poisoned chalice.

My post of February on LOTF quoted Sarkozy on his intention to run for prime minister: "I will run for leader of the UMP and no one can stop me!" During a heated telephone conversation, the right honorable minister Sarkozy added, "I'll be the candidate because I am the best. I'll run against [prime minister] Jean-Pierre [Raffarin] if I have to and, what's more, I'll win." Many people think this is simply a political rivalry, however I made sure to include the following paragraph:

This is not the first time that Sarkozy and Chirac have battled over the PM's seat and, of course, we have reason to suspect that there is more to this than meets the eye. In his book (published last year and to which I have referred before), editor Guy Birenbaum writes (p. 98) about "political disputes and other internal frictions that are experienced by all parties and which, most of the time, are 'sold' to the public as so many battles among men and women, mechanical clashes, conflicts of trends, if not of ideology when, at the outset, they cover over banal personal matters. [...] How much longer [did] we have to wait to learn that the waring between Nicholas Sarkozy and the Chirac family was not in fact rooted in the 1993-95 betrayal when the current minister of the Interior supported Edouard Balladur in the presidential elections, but rather in the break-up between the former mayor of Neuilly [Sarkozy] and the president's daughter [Claude Chirac]? [...] In February 2003, when the tensions between the Elysée Palace, Bernadette Chirac and the minster of the Interior [Sarkozy] seemed to be rising again, only Eric Mandonnet of the magazine L'Express would describe the real cause of the dust-up: 'I will never forgive him because he has penetrated my privacy,' he quotes Chirac as saying crudely [... Eric Mandonnet, "Chirac-Sarkozy: la guerre froide," L'Express, 30 janvier 2003]." [emphasis added]