france,  Politics

What is the Loi Pacte and why are the French medias talking about it? | MINI POLITICS

The PACTE Law (which stands for ‘Plan d’Action pour la Croissance et la Transformation des Entreprises) is a huge, ‘catch-all’ draft law proposed by Macron’s government with the aim of facilitating and improving economic growth for businesses in France.

Inside the hemiscycle of the Senate in Paris, France

It has been a huge source of contention in the National Assembly over the past few weeks, particularly because of a measure to create a “disruptive innovation fund” of about 10 billion euros which would support companies to develop disruptive technologies in France – very new developments like blockchain, artificial intelligence, clean energy, and so on. France is very aware that now is the time to get its foot in the door of new technologies, or foreign companies will get there first and develop too quickly for anyone else to catch up.

A bid for French innovation

How, though, does the Minister for the Economy, Bruno Le Maire, propose to raise this 10 billion dollar fund in the PACTE Law? That’s where the arguments start. In order to do this, the government will be privatising selling the majority of its shares in three major companies: the Aéroports de Paris (ADP) which manages the two main Paris airports and the 228.2 million passengers which pass through them each year; the Française des Jeux, the company which runs and holds the monopoly on lottery games and sports betting in France; and Engie, the third largest energy provider group in the world.

Such a huge privatisation has raised equally large opposition from some members of parliament, particularly those on the left, who have raised concerns about the morality of the move. If private companies are at the helm of such influential companies, what is to stop them from prioritising profits and cost-cutting rather than the good of the public and their needs? There were particular concerns about minimising underage gambling and gambling addictions, issues which are currently tackled by government policies through their majority share in the FDJ. To combat this, the government have proposed to set up an independent regulatory authority to ensure the FDJ is not allowed to change the rules currently imposed on it.

Opposition Left, Right and Centre

However, there has also been a lot of opposition from the right, who see it as selling the “family jewels” and have questioned the fact that while the State currently receives large returns on its shares, once the 10 billion euro fund runs out, they will no longer have that income to fall back on. A “short-term policy” and a “strategic error”, according to many critics of the PACTE Law.

Nevertheless, this privatisation fund is only one part of the draft law. The government has also proposed many other changes, such as, in simplified terms:

  • The abolishment and freezing of employment thresholds which can often currently discourage companies from hiring more people due to the huge amount of bureaucracy involved when they pass thresholds. From now on, they will have more time to complete these obligations.
  • The “forfeit social” tax will be lifted for SMEs, facilitating easier non-salary payments (such as profit-sharing) which aren’t subject to the usual social security contributions. This tax started out at 2% in 2009 but has seen significant inflation, now resting at 20%! The government hopes this will have macroeconomic consequences and will improve purchase power among businesses and employees.
  • The process of setting up a business will be hugely simplified.
  • Micro-entrepreneurs will no longer have to have a separate bank account for their business activities up to 10,000 euros in turnover.
  • There will be more transparent policies around salaries, meaning that listed companies (those on the stock exchange) will have to publish their pay gap between the highest and lowest paid employees, as well as the average salary.
  • There will be a “name and shame” tactic to discourage companies who do not pay their employees on time.

The process of getting the PACTE Law through parliament and into operation is a long and arduous one, but it is also well underway, and marks a strong demonstrative step in Macron’s economic plans for the country. While the President is facing mixed approval rates (by which I mean very low approval rates), there is no denying that he is maintaining the all change image he put forward from the very beginning of his term.

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