Hollande forced into U-turn after France's "Pigeons" swoop on tax plan

Atlas shrugs in France, and wins.

François Hollande was pressured into reneging on a highly unpopular tax bill on Thursday after fiscal changes outlined in the 2013 budget provoked uproar amongst France’s entrepreneurial sector.

The climb-down came after a viral barrage launched by a group of web entrepreneurs calling themselves ‘Les Pigeons’ (French slang for ‘chumps’). The movement has garnered a significant wave of support, with almost 63,000 members on Facebook alone and the hashtag #geonpi trending worldwide on Twitter.

At present, French entrepreneurs pay 19 per cent capital gains tax (plus 15.5 per cent in social security contributions). New measures announced in the September 28th budget pledged to bring capital tax in line with income tax, meaning that start-ups that take in over €150,000 annually (most of them) would be forced to pay a whopping 45 per cent in capital gains tax, practically double the current amount. When added to the mandatory 15.5 per cent in social contributions, the total tax rate clocks in at a staggering 60 per cent.

To put that into perspective, the average European capital gains tax lies somewhere between 18 and 25 per cent, with maximum rates set in the UK (28 per cent) and Germany (26.4 per cent).

"Les Pigeons" protest that such shifts in the country’s fiscal policy are unfairly skewed against the startup community. Commentators warn that such tax increases could decapitate France’s entrepreneurial base, choking innovation and rendering small businesses creation almost entirely untenable.

Crucially, Hollande’s decision to introduce such exorbitant tax hikes represents a fundamental backtrack on earlier campaign pledges to re-balance taxes in favour of startups, leaving many entrepreneurs asking themselves if they still have a future in France.

“The government thinks France’s entrepreneurs are pigeons”, the movement’s Facebook page declares. “Anti-economic policies are crushing the entrepreneurial spirit and exposing France to a big risk”.

The formidable lobbying force of the ‘Pigeons’ movement led to finance minister, Pierre Moscovici, setting up emergency talks with entrepreneurs last Thursday to negotiate changes to the tax bill.

“We don’t want to give the impression that we want to punish the Pigeons”, a Hollande representative told Reuters. “We’ll find a solution … the Pigeons should return to their nest”.

However, despite the climb-down, Hollande has set a dangerous precedent. By alienating France’s thriving entrepreneurial community, he runs the risk of squandering the sector’s promising economic potential. A study of 108 French SMEs revealed a drastic 33 per cent growth in revenue from €753m in 2010 to €1bn in 2011. These impressive growth rates ran parallel to a 24 per cent increase in employment figures, with most workers employed under a CDI contract - the strongest of its type in France.

The decision to saddle such a burgeoning sector with a salvo of taxes seems confusing at a time when many of country’s larger corporations find themselves struggling to remain competitive. Peugeot and Bouygues have already laid off thousands this summer and the mood in the French business community is souring. Hollande is alienating small business precisely when he needs them to drive growth.

Such economic oversight comes at a bad time for Hollande. With unemployment at a 13-year high and 2013 growth forecasted at shocking -0.2 per cent, Hollande’s perceived pursuit of an anti-capitalist, anti-economic agenda won’t do him any favours - especially if he is to fulfill his election promise to hoist the French economy back on its feet.

Concerns are rising in France that the government’s strident model of budgetary rigour is simply incompatible with nurturing a flourishing entrepreneurial sector.

For François, the Honeymoon has ended abruptly. And with his approval rating plummeting from 56 to 41 per cent since his inauguration, he needs all the friends he can get.

François Hollande. Photo: Parti Socialiste

Alex Ward is a London-based freelance journalist who has previously worked for the Times & the Press Association. Twitter: @alexward3000

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Trade unions must adapt to the gig economy in order to survive

We can’t allow the story of UK trade unionism to just be about managing decline.

While the world around trade unions has rapidly changed, there is an impression trade unions have remained stuck in the past with antagonistic rhetoric, outdated governance structures and an inflexible approach. Yet trade unions remain as vital as ever in an insecure jobs market, and do have the capacity to protect workers and inspire support when they use positivity in place of hostility.

The future of the UK trade union movement has long been a matter for concern. Trade union membership has been stagnating for the last 30 years and structural changes in the UK economy have led to trade union density in the private sector dropping below 14 per cent. 

The most worrying aspect of this decline is that – despite work being increasingly less secure, growing wage inequality, and workers’ rights being slowly rolled back since 2010 – trade unions, or more precisely trade union membership, appears not to be a relevant choice for millions of workers.

Polling suggests that too many people who would be interested in being a member of an organisation that offered independent advice and protection at work are put off by the tone of voice and confrontational language they hear from union leaders, usually only during an industrial dispute or power struggle within the Labour party. If unions used to be angry, now they’re furious, and it is not helping.

Trade unions face serious challenges, but if we adapt, we can survive. The rise of self-employment, freelancing and the "gig economy" means more and more people are in need of the services and support that unions offer. But our benefits and services must be responsive to the needs of workers today and be flexible enough for change when it comes. 

We do not talk openly enough about our successes. We shouldn’t be embarrassed when we make something happen whilst working in partnership with decent employers. Nor should we shy away from championing successes achieved through industrial strength, but we need to be more sensitive to how we frame this to a wider audience.

But tweaks to our messaging and services are not enough on their own. We also need structural change in our trade union movement to ensure our long-term success.

Firstly, we need to recognise the severity of the situation that we are in and face up to the facts of declining membership, relevance and authority. There needs to be an acceptance that it is the responsibility of the trade union movement to understand the problems we face and to address them – not to blame others such as the press, politicians or employers.
 
Secondly, we need to build a consensus across the trade union movement on a recovery strategy. Given the diverse interests of our many sister organisations, that is easier to say than to deliver on. Strengthening the governance of trade unions should be one priority, seeking to develop a tripartite social framework with employers and government should be another.
 
Thirdly, we need to ensure the continuing and increasing relevance of trade unions to the world of work. We must recognise that we are struggling to connect beyond our membership and in many cases even beyond our activist base.

Too often change is done to trade unions, rather than by them. The Trade Union Act is the most recent example of a Conservative government taking action to reduce trade union influence. It won’t be long before they return to this pursuit. So rather than waiting to respond, why don’t we take the initiative?

It shouldn't be beyond the collective wit of trade unions to seek to develop and modernise our own structures, develop ideas that would underpin our future independence and seek out best practice across the movement in the delivery of services and benefits.
 
These are undoubtedly big challenges for the trade union movement. I know we want to help build a fairer, more equitable society with decent jobs, housing and education. Wanting to do these things isn’t enough, we need to be in a position to make change happen.

John Park is assistant general secretary of the trade union Community.