The government is strapped for cash. The economy is in trouble. The social security system is running on a massive overdraft (trou). Its high labour costs, which largely fund the social security system, make it uncompetitive on the world market. The aim of the reforms going through is to lower the cost of labour and increase purchasing power.
“France only needs one per cent more growth to solve all its problems and restore its self confidence,” said Nicolas Sarkozy before the elections. With foresight, bearing in mind the present banking crisis, he went on to say, “We cannot be satisfied with floating along on the ups and downs of the world economy over which we have no control. If we want growth we have to find it ourselves and in ourselves.” British readers may remember the same search for that elusive extra growth in the 1960s and 70s and how hard it was to find.