New French President Francois
Hollande and his Socialist government adopted a 30 percent pay cut Thursday, a
gesture of shared sacrifice by leaders who must now reduce the country's
massive debts and tackle spiraling unemployment.
The new Cabinet's first meeting,
just a week after conservative former leader Nicolas Sarkozy last convened his
government, marked a sharp shift in France's power structure and strategy for
solving Europe's debt crisis and restructuring the economy.
The new finance minister reduced
hopes in some other European capitals that Hollande would ease off on his push
for a renegotiation of a hard-won European treaty on trimming budgets.
Hollande, elected May 6, has said
the treaty focuses too much on spending cuts that are stifling growth and
making the debt crisis worse, and argued for stimulus spending as well. He and
the leaders of Germany, Britain, Italy and the European Union will hold a
conference call later Thursday to discuss Europe's economic strategy ahead of
the Group of Eight summit in the United States.
Hollande promised during his
campaign to protect France's elaborate social benefit system even vowing to
roll back some of Sarkozy's cuts 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. Economists say growth will require deep reform to France's
inflexible labor market and it's unclear
if Hollande is willing to take that on.
Ministers leaving the Cabinet meeting
said the government started by adopting a 30 percent pay cut and signing an
ethics charter to spend less money on travel and on their ministries.
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
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.
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.
Hollande leaves Thursday night
for Washington for a meeting with President Barack Obama, then attends the G-8
and NATO summits.