New French govt agrees 30% pay cut for president, ministers

Members of France’s new Socialist-led government will promise Thursday to take a pay cut, a gesture of shared sacrifice by leaders who must now both reduce the country’s massive debts and tackle spiraling unemployment. President Francois Hollande promised during his campaign to protect France’s elaborate social benefit system -- even vowing to roll back some cuts that his predecessor Nicolas Sarkozy had made -- while also continuing to trim the country’s deficit. France hasn’t balanced a budget in nearly 40 years, and Hollande has promised to eliminate the deficit in 2017. It will be a difficult balancing act for the Socialists, who are taking power in the middle of a global economic slowdown and Europe’s debt crisis. France’s GDP did not grow in the first quarter of the year, and restarting growth will be key to managing the country’s finances. But economists have said growth will require deep reform to France’s inflexible labor market -- and it’s unclear if Hollande is willing to take it on. “Francois Hollande has always said we have to fight the debt, reduce the deficits, secure France’s situation. A country that is indebted is a country that grows poorer,” said the new Finance Minister Pierre Moscovici on BFM television on Thursday. “But responsibility and growth are not mutually exclusive.” He added that the government wouldn’t renege on its campaign promises. Hollande’s new Prime Minister Jean-Marc Ayrault said Wednesday night that the government would start by making its own sacrifice, by cutting the ministers’ salaries by 30 percent. “It’s setting an example,” he said on France-2 television. The cuts will be proposed later in the day when the new Cabinet meets for the first time. But as a series of handovers of power took place Thursday, the emphasis seemed to be more on fulfilling campaign promises to enhance or at least protect benefits than on cutting spending. Employment Minister Michel Sapin said his major challenge would be reducing unemployment that has reached 10 percent and allowing people who started working at a young age to retire earlier than a law passed under Sarkozy currently allows them to. Sarkozy faced down unions and strikes to push the retirement age to 62 from 60, saying it was the only way to save the system. “We need to as quickly as possible put an end to the flagrant injustice put in place by the previous government,” said Sapin after the handover of power. “What’s on the agenda is to ensure the sustainability of our social benefit system that will allow retirees to live.” The new government will also confront major international questions, like Hollande’s promise to withdraw troops by the end of the year from Afghanistan. Defense Minister Jean-Yves Le Drian, an old friend of Hollande’s, and Foreign Minister Laurent Fabius, a former prime minister, will surely wade into that debate, which will be raised at a NATO summit this weekend in Chicago. Many NATO partners are unhappy with Hollande’s decision. France had previously committed to keeping troops in the country until 2013 -- already faster than the alliance’s timetable.