Introduction to the Presidential press conference

Elysée Palace – Tuesday 14 January 2014

Ministers,

Journalists,

Ladies and Gentlemen,

This is the third press conference since the beginning of my five-year term. On 31 December, I addressed my wishes to the French people, and I sketched out a roadmap. It is a simple one: getting French society moving.

For I am convinced, deeply convinced, that if France hopes to maintain its global influence; if France hopes to weigh on the direction of Europe; and if France wants to remain master of its own destiny, it must, must recover its economic strength. Yet it has lost some of that strength in the last decade.

First, there was a long, deep crisis, doubtless underestimated, including by ourselves. And then there was a headlong rush, which lasted too long and swelled deficits: deficits in the public accounts and in the current account.

The end to that has come. It is the action of Jean-Marc Ayrault’s Government in the last 18 months that has brought that about.

The first results are here. They are fragile – too fragile. Yes, youth unemployment has fallen in the last six months. Yes, unemployment has stabilized and trends are emerging. But we haven’t yet won the battle for employment.

So what should we do? This is what I announced to the French people. Begin a battle, and a new stage. This is not about changing course. It is about going faster and further, accelerating and deepening.

The challenge is not simply for France to return to growth in 2014 – it is emerging. It is for that growth to be as vigorous as possible. We can only achieve that with the mobilization of all parties, including businesses, without which there can be no long-term job creation.

This is why I proposed the responsibility pact.

The principle is simple: reducing the fiscal obligations of businesses, reducing constraints on their activities; and, in return, enabling more recruitment and greater social dialogue.

Why this pact? Because the time has come to solve France’s main problem: its production. Yes, its production. We need to produce more, and better. Action is therefore needed on supply. Yes, supply! This is not contradictory with demand. Supply even creates demand.

This pact has four main dimensions.

The first is continuing to reduce the cost of labour. We began with the programme I presented in November: the Competitiveness and Employment Tax Credit (CICE), which will apply this year in 2014. It involves a 4% reduction in payroll costs, and 6% next year.

I am setting a new goal, that, by 2017, contributions on salaries for the family branch of social security – for both businesses and freelance workers – will be finished. That represents €30 billion of payroll charges. The discussions will therefore look at the future of (CICE) – how it can fit into this process – and how we can fund social protection.

This is the condition for businesses to recover their margins. Not just to please them, or to grant them some gift. I think you all know that what we call the margin rate of businesses, which allows them to finance investments, was, in 2012, the lowest it has ever been.

The second dimension is giving businesses visibility. Investment is impossible if the framework is unclear or if the rules change. We will therefore set a deadline – 2017 – with a trajectory of corporate taxes and contributions for businesses. My wish is for modernization of corporate taxation and a reduction in the number of taxes – which sometimes cost more to collect than they contribute – with two requirements: investment and employment.

A first act will begin with the 2015 budget.

The third dimension of the responsibility pact is simplification. The number of regulations needs to be reduced, as I announced with the “simplification shock” – which has begun – and to go even further, reducing sometimes useless or expensive procedures and facilitating decision-making. This is a key component for restoring confidence. I have entrusted the task of going all the way, providing advice on simplification, to a parliamentarian, Thierry Mandon, and a business leader, Guillaume Poitrinal – an alliance that may seem surprising. They will review the “10 key steps” in the life of a business, from creation to sale, including the opening of factories, access to public procurement, recruitment formalities, accounting obligations, administrative and tax inspections, etc. – everything. Not to diminish protections, particularly social, health and environment protections, but to simplify and facilitate. And this movement will not stop until the end of my term.

The fourth dimension is what businesses do in return.

The actions of this dimension need to be defined at national level, and adapted according to professional branches. They will involve recruitment targets – with numbers – as well as employment of young people and seniors, the quality of work, training and the opening of negotiations on pay and the modernization of social dialogue. An Observatory will be set up to monitor these actions and Parliament will be involved.

That’s what the responsibility pact is about. It is a great social compromise – probably the greatest that has been proposed in our country in decades. It involves all stakeholders: the State, local government, and, or course, the social partners.

My method is negotiation. This method has proven its worth since the talks on “generation contracts”, then in the agreement on job security, the pensions reform conducted by the Prime Minister, and again, recently, concerning vocational training. This is the right method.

The responsibility pact is an opportunity that everyone should seize. Not simply in their own interest, but for France. All professional organizations, all the political families, in a way, and all territories are concerned. The responsibility pact is a matter of rallying together for employment. And I expect everyone, once again, as the name implies, to shoulder their responsibilities.

But there is no time to lose. No intermediary election should paralyse us. France now needs to bounce back to get moving again. This means a particularly dense, tight schedule.

On 21 January, I will speak to all economic and employment players here, to officially inaugurate the pact and its different dimensions. The social partners will be received in the following days by the Prime Minister and the Ministers concerned. By the end of January, the “Conference on Corporate Taxation” will be set up by Jean-Marc Ayrault. The High Council on Financing Social Protection, which is itself to consider the evolution of the method of financing, will publish a first report in late February. Lastly, the Government will launch a new package of simplification measures in April.

All these discussions will continue and will conclude during the Great Social Conference in the spring. A document will formalize the pact’s commitments and the procedures for monitoring the actions businesses carry out in return. The Government will stake its responsibility before the National Assembly on this text.

A public finance and social spending bill for the 2015-2017 period will be voted on in the autumn. It will be in coherence with what is decided in the framework of the responsibility pact, as well as with the overhauling of household taxation, which has already been begun by the Prime Minister, as all that goes together.

During my wishes on 31 December, I also told the French people that I wished to reduce public spending. Why? Not as a goal in itself. More than anyone else, I am committed to maintaining public services and our social model.

So why reduce public spending? Because it is vital to reduce public deficits. Because it is a requirement for any tax cut. Because it is needed for the implementation of the responsibility pact, which must not lead to transferring costs from businesses to households. I will not accept that, given purchasing power today.

So how can we go about it? I think it is possible to make savings, many savings, while preserving our social model. Other countries have done so, including countries with this social traditions, such as the countries of the North. They have come out of it more dynamic and more mutually supportive. We can be confident in this process because it has already begun.

I would like to recall that public spending was controlled in 2013, with the State spending less than was voted for by Parliament. Health insurance spending even was lower than was expected. This year, in 2014, we will make €15 billion of savings.

So, what still needs to be done?

Between 2015 and 2017, we need to save at least €50 billion more. That’s a lot – indeed, it has never been done before. It is, however, the equivalent, in real terms, of 4% of all our collective spending – only 4%. But it still needs to be done. To achieve that, I have decided on a new method:

rather than making blind budget cuts – as has happened in the past – which are undifferentiated and unfair, affecting everyone, I propose to implement structural reforms, to redefine the major roles of the State, and to review our redistribution mechanisms to make them fairer, more ecological and more effective.

I will create therefore a Strategic Spending Council to advise me. It will meet every month to assess public policies.

The schedule of the budget procedure – sorry for going into detail – will begin today. In April, the Prime Minister will send framework notes to the Government Ministers, setting down the amount of spending and determining not only the volume of savings to be made in 2015, but also the volume of savings to be made until 2017.

All spending, all policies and all structures will be concerned. The State will show the way; that is its role. But it cannot be alone in this process, as it represents only a little more than a third of public spending. The rest is the responsibility of local government and what is called social protection.

Our territorial organization will therefore also have to be reviewed. In 2013 already, an act created 13 major metropolises – significant progress – because these metropolises are a source of attractiveness for our territory, also focusing investments. Metropolises are now of a scale which is necessarily European, and sometimes even global. The first step has been taken.

We need to take another step this year, in 2014, putting an end to overlaps, duplications and confusions. Administrative regions will be entrusted with new responsibilities in an upcoming decentralization act, and will even be endowed with power to adapt regulations locally, giving elected representatives greater freedom to work. A strict clarification of competences between local government bodies will be introduced.

Local government bodies will also be encouraged and invited to come together. Regions, firstly; their number could also change. There is no reason for there to be the same number in a few years as there are today. And Departments; those that are situated in major metropolitan areas will have to redefine their future. This has already happened, notably in the Rhône Department with Lyon. I know that elected representatives, like our citizens, are prepared for developments on these matters. We will introduce powerful incentives to support them. State funding will vary based on the groupings that are formed.

Concerning social security, which is central to our republican pact, and which I intend to protect because it is a good, a common good for all those who have no other goods... I have said that we need to combat excesses and abuses. There are always excesses and abuses, everyone knows them. Not simply fraud, which represents €600 million, half on the part of businesses and half on the part of those who claim support to which they are not entitled.

What we need to do is to reduce the increasing numbers of prescriptions and redundant medical acts which, in France, have led us to see a record in consumption – with generics usage being lower than anywhere else – and pressure on hospitals because of the lack of genuine healthcare pathways.

This is the effort that is needed to guarantee our social model and public services. And to continue, despite what I said about spending, making youth our major commitment over this term.

It is for young people that we created 100,000 “future jobs” in 2013. We will add 50,000 in 2014. It is for young people that we introduced the “generation contract” which will quickly gain momentum. It is for young people that we are increasing the number of young people who participate in civic service: there will be 35,000, a 15% increase. In the long term, I would like all young people who wish to do civic service to have a place. It is for young people that the Government will continue adjusting university grants, which have already benefitted 100,000 students. It is for young people that we are combating the phenomenon of children dropping out of school. For, alas, inequalities have risen over the last 10 years.

Tomorrow, Vincent Peillon, the Minister of National Education, will present a plan for priority education zones in the Council of Ministers meeting. The idea is simple: making postings in territories where the most difficulties are concentrated more attractive for teachers, and stabilizing staff teams. Measures on an unprecedented scale will be implemented to improve their working conditions, pay and career prospects.

School embodies the Republic. And the Republic is our heritage, but also our future. I will therefore, as I said before the French people, be intransigent in defending it. Anti-semitism, racism and xenophobia will be driven out, as was done at the initiative of the Minister of the Interior. The law will be applied everywhere, unwaveringly.

Here again though, I would like to reassure. Freedom of assembly and freedom of creation cannot be diminished in any way, except in exceptional circumstances. What is an exceptional circumstance? It is when the dignity of individuals is undermined, or where major public unrest is feared. This is why we intervened.

Coming back to the dignity of individuals, in a whole different field. I have in mind the debate on the question of end-of-life care. Some particularly painful cases have appeared in the news. I commissioned a report very early upon my arrival. The Ethical Advisory Committee will submit its conclusions to me in the coming weeks. The Minister of Health will carry out the necessary consultations for an agreement – the widest-ranging agreement possible – to be found on a law.

I would like this text to be drawn up without controversy, without divisions, and simply in the mindset that a process is possible to unite all of society. It means allowing any major, conscious person suffering an incurable disease that leads to unbearable psychological or physical suffering that cannot be alleviated, to request, under strict conditions, medical assistance to end their life in dignity.

The values of the Republic are the values of France at international level. This is why France intervenes abroad and why it wants to maintain its place and fully play its role.

In Mali, almost exactly one year ago, I launched a military intervention, backed by the United Nations and Africa. The result is clear to see. The jihadists have been driven back and defeated. Mali can enjoy territorial integrity once more. General and presidential elections have been held. The State is rebuilding itself. Development assistance can at last be made available. And it has been: €800 million of the €3 billion collected internationally is already being used, completely transparently, to aid the people of Mali.

There are moments when victory must be celebrated. This is one such moment. Victory over terrorism, victory for democracy and victory for development. I would like to pay tribute to our soldiers who fought in extremely harsh conditions, in temperatures higher than we, in France, can even imagine. But the operation will soon be over. It will rely on no more than 1600 soldiers by February and 1000 by the end of spring. It exemplifies a useful intervention, in which France has played an appropriate part.

In the Central African Republic, France was called upon. Not by a dictator or a Head of State in danger, but by the international community, a resolution of the United Nations Security Council and African representatives, to avoid a humanitarian disaster that had already, unfortunately, made its presence sorely felt. There had been so many atrocities and acts of violence that we felt no doubt or hesitation before intervening! It is not over yet. Some people hoped that it would be resolved in a month, that we would arrive, the armed forces who were fighting would fraternise and peace would be restored… This is not feasible. Let me reiterate that our work is not finished; we are going to continue it, but in a context that will, inevitably, be different.

Firstly, because Europe will be involved. On 20 January, humanitarian and security operations will be set in motion. At a later stage, a peace-keeping force will be established and will take over. Lastly, certain political initiatives have been taken. We do not intend to choose leaders for the Central African Republic. France is providing assistance but not replacing the government. Those times are over and done with. So we hope that peace will gradually return, followed by disarmament and political transition. There are currently 1600 French soldiers fighting alongside 4000 Africans. Once again, when the mission has achieved the expected result, these forces will return home.

France’s future is also Europe’s future. I could reverse those words. Europe’s future is France’s future. In 2013, significant outcomes were achieved. The euro area, which was said, quite rightly, to be in danger, has been stabilised, without any country leaving it. Those who had the most difficulties are now in a position where they are able to finance themselves on the markets. The Banking Union may seem complicated, but it is simple. The aim is to prevent bank crises, for which tax-payers are then asked to pick up the bill. The project is complete: the Banking Union has been established. It protects us from financial crises. If a bank in Europe were to collapse, nobody, except the banks, would be responsible for rescuing it.

Yes, some progress has been made, although not enough. A growth pact, which, in my view, could have been more extensive. Youth employment was considered a priority, but allocated an inadequate amount of funding. Progress has been made with regard to worker secondment, which, particularly in Brittany but not only there, was causing serious competition problems in many industries. Once again, let us celebrate the victories that have been achieved.

But 2014 cannot simply be about mending cracks, avoiding crises or preventing a recession. It is time for the revival of Europe. I mentioned this during the last press conference. These initiatives for Europe must first be agreed between France and Germany. I am making three proposals.

An initiative for economic and social convergence between France and Germany. Germany's decision, under the grand coalition, to introduce a minimum wage is the first step in this direction. But we must also, on our part – and this is the reasoning behind the responsibility pact that I have described – work to harmonise tax rules, particularly for companies, between France and Germany.

Second initiative: coordinate our efforts with regard to the energy transition. This is a significant challenge facing Europe. But we, France and Germany, must set an example. Germany has taken the lead in the development of renewable energy sources. We, too, can show that we are at the forefront when it comes to energy storage and networks, and above all, the creation of joint industrial sectors for the energy transition.

We are very proud of the exceptional success of AIRBUS, a large company that is not only Franco-German but also European. The idea is to create a Franco-German company for the energy transition. A splendid alliance.

Lastly, the third initiative may cause some surprise. I would like there to be a Franco-German partnership for European defence. There is, of course, the Franco-German Brigade, which Jean-Yves Le Drian is better placed to talk about than I am. But we need more than a brigade. We need to demonstrate our joint responsibility for global peace and security.

A Franco-German Council of Ministers’ meeting will be held in Paris shortly, on 19 February. The Chancellor and I will establish a basic principle: namely, that our Governments are to collaborate from an early stage on all large projects. This Franco-German momentum will enable us, if we are capable, as I believe we are, to revitalise the European ideal, in the wake of the European Parliament elections.

We must move towards an Economic and Monetary Union, with a euro area that has a real government, aiming for growth and employment, even where industry is concerned, and with financial resources that enable us to act. That is the kind of government the euro area needs.

I would like to reassure those who are anxious, particularly as we approach the European Parliament elections, by emphasising that instead of fearing Europe, we should fear that Europe might grow weak and eventually, disappear. Building Europe does not mean destroying France. On the contrary, by strengthening Europe, we can offer France greater protection. I shall not give way, over the next few months, to those who wish to abandon the European ideal. Whether they are in France, elsewhere, or even in government. I shall not give way to those who wish to abandon the European ideal or to destroy the EU acquis, which is the work of so many generations.

Nor shall I give way to those who wish to leave the euro area, in the belief that they are saving the nation, when in fact they are putting it in danger. Because our future lies with Europe, but a Europe that we must reorientate.

Ladies and Gentlemen, that is what must drive us in 2014: France’s future. What the country will be in ten years. I have requested that we do this exercise because we must look much further than the time period that I set. What will we have become in ten years? A great country which takes its place, maintains its position, and makes decisions? Or a country that watches others, saddened, self-critical, anxious, and represents a society that has lost all self-confidence?

No! Certainly not! France must understand that it will have a great future ahead if it is able to make the necessary preparations. This issue is also central to the responsibility pact. There comes a time when it is necessary to gather one’s strength and focus hard on investment in all areas: production, education, the environment, science, etc. Investment must be the priority in all cases.

What we become in ten years will be decided by us today. Today we lay the foundations for France in ten years. My first wish is for France to be economically strong, otherwise there can be no diplomacy or international influence; to foster a harmonious society, otherwise there is disintegration, imbalance, inequality, confrontation and division.

I wish for France to be resolute in affirming its republican destiny, because we must live together and fight against territorial inequality. I wish for France to maintain a healthy population size, as it currently does, and for its youth to occupy their rightful place. I wish for France to remain attached to freedom, all types of freedom and in particular, freedom of the press.

I present these wishes to you, sparing a thought, in particular, for the four absent journalists who are being held hostage – not to mention the two non-journalists who are being held in the Sahel. The four journalists being held in Syria are Didier François, Edouard Elias, Nicolas Henin and Pierre Torres. We are continuing to do all that we can to have them successfully liberated. Thank you.

I am ready to take your questions. We will start with your questions, and then there will be time to focus on economic, social and interior affairs. International issues will be addressed at the end.

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