Walk Before You Run

Listening to Ernest-Antoine Seillière complain, you might assume the French left was still in power. Last week Seillièrepresident of France's main employers' organizationsternly warned the government to re-examine proposals that "serve neither economic growth nor employment." He also denounced the government's hesitancy to roll back job-protection measures and lift overtime limits linked to the 35-hour workweek. Seillière's criticism of France's nominally business-friendly government was remarkable, since he is not only the nation's leading lobbyist of market liberalization, but also the man who inspired the economic program that helped sweep the conservatives into office last June.

As Prime Minister Jean-Pierre Raffarin's rightist government completed its fourth full month in office last week, it continues to shy away from many of the reforms it once promised to impose. Analysts have stopped counting all the contradictions, policy pirouettes and public climb-downs that have punctuated its brief reign. Raffarin and his neo-Gaullist bossPresident Jacques Chiracbenefit from near-complete conservative domination of the French political system, but you wouldn't know it from their policies. That has led traditional allies like Seillière and other business leaders to lament the lost opportunitya chance to slash away at a social and economic structure they view as hobbled by an obese public sector, hefty taxes and costly entitlements. "We've had a change of political direction," says Seillière, so he can't understand the government's "hesitation to modify laws that the right has always denounced in the strongest language."

But there may be wisdom in Raffarin's go-slow strategy. In 1995, France's last conservative government provoked crippling month-long strikes with its steamroller approach to reform. The fury unleashed by that effort cost the rightist government of Prime Minister Alain Juppé its parliamentary majority in 1997 elections, won by a previously floundering coalition of leftist parties united under Socialist Party leader Lionel Jospin. Aware of France's dimming economic outlook, Chirac and Raffarin are now opting for caution over collisionand have backed down when their measures have generated opposition. The tact is apparently working: approval ratings for Chirac and Raffarin are holding steady at a solid 53% and 58%, respectively.

That support has come at a price. Not only are reformists like Seillière cry-ing foul, but government spin control has at times been dizzying. Raffarin cabinet members have issued clashing policy pronouncements, forcing the Prime Minister to officiate and clear the air. Sometimes the government shows signs of wanting reform but lacking the stomach to go through with it. Last week, for example, after a junior minister provoked a storm by revealing job reductions planned for France's mammoth public school system, Education Minister Luc Ferry rushed to placate teachers' unions with assurances that only administrative posts would be cut. Budget Minister Alain Lambert and Economy Minister Francis Mer have similarly been at odds on fiscal policy. Their most notable mixup arose over possible tax cuts in 2003a must if Chirac's extravagant campaign pledge to reduce taxes by 30% before 2007 is to be met, but a difficult task during an economic downturn. Such floundering has led some pundits to dub Raffarin's team "the Laurel and Hardy government."

All the caution and crossed signals may finally be giving way to bolder action. Last week, a mere 48 hours after Seillière's outburst, Employment and Social Affairs Minister François Fillon announced a decree temporarily liberalizing employee overtime limits from the current 130 hours a year to 180. That falls short of the 200-hour permanent limit Seillière sought, but it represents a significant retreat from the 35-hour week instituted by Jospin. Then the government leaked its 2003 budget, which would reduce income taxes and employer-paid benefits but raise minimum wages and maintain the state's status as France's largest employer, providing one of every four jobs. "Raffarin previously flirted with reform, but that's changing with this budget," says political analyst Alain Duhamel. "On areas like decentralization, tax reduction and even modifying the 35-hour week, he is proving reformist. On the issues more likely to provoke explosionreducing civil servants and public services, for startershe's looking as unenthusiastic as his predecessors."

The good news for Raffarin is that even though France's social and labor terrain is heavily mined, his majority may be able to use its five-year term to put its reforms into place graduallyand ride out any waves of protest. With the leftist opposition in disarray after its electoral trouncing last June, Raffarin's stiffest challenge may come from the European Union: its requirement that budget deficits steadily come down will be tough during an economic slump, especially if Raffarin cuts taxes without shrinking the public sector. That's an economic equation studded with contradiction and conflictqualities the Raffarin team so far has demonstrated in abundance.