Delivering change in difficult times

Vittorio Trevitt

Wednesday, 27 November 2013

Change is a word much in vogue at present amongst those who wish to see a progressive alternative to the medicine of austerity that has been fed to EU citizens for the past few years. The concept of change is one close to the hearts of progressives who are committed to using the state as a force for change, and at a time of austerity it is worth drawing inspiration and ideas from past centre-left governments that pursued redistributive socio-economic policies in difficult economic times. One such government is the French Socialist government of Pierre Mauroy from 1981-84.

Mauroy’s socialist government, the first in France since 1957, took office at a time when the European Community was experiencing similar economic difficulties to today, with many governments going down the road of austerity. Mauroy took a different approach, increasing public spending, wages, and benefits to stimulate demand and reduce inequality. Housing benefits and family allowances were increased by over 20% and an assistance scheme was set up in June 1981 for families who were struggling financially.  In addition, a large housebuilding programme was launched, hundreds of thousands of elderly people were exempted from local taxes and television licenses, and increases made to the minimum wage raised the purchasing power of low-paid workers by over 10%. In addition, 200,000 new public sector jobs were created. The government turned to progressive means to finance such measures, introducing a wealth tax along with taxes on the windfall profits of the credit and energy sectors.

Although these policies encouraged consumer demand, they failed to improve France’s economy in the long-term, with rises in inflation and unemployment and a sharp fall in the balance of payments. This situation was exacerbated by a flight of French capital in response to the decision made by France’s trading partners to raise interest rates to combat inflation, and a number of deflationary economic measures were carried out from 1982 onwards.

Despite its shift to a more restrictive economic strategy, Mauroy’s government continued its reform programme. Improvements were made to unemployment compensation coverage, parental leave arrangements and provisions for redundancy, while youth traineeships and early retirement schemes were expanded. In addition, a reform to the public sector allowed there to be employee representatives on management and supervisory boards. Such measures demonstrated the government’s commitment to social change in a harsh economic climate.

The lesson to be learnt from the experience of the Mauroy Government is that it is possible for progressive governments to carry out social change even in the face of calls for fiscal austerity. At a time of economic uncertainty, progressive governments must remain true to their ideals and pursue social change for the benefit of all.

Topics discussed:

EuropeGood SocietyThe State

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