French firms help 'Santa' Macron spread holiday cheer with bonuses

PARIS • As French President Emmanuel Macron transforms from Grinch to Santa, scrapping planned taxes and raiding public coffers to boost wages, French companies are rushing in to become his little helpers.

Among the measures Mr Macron announced to appease the so-called "Yellow Vests" protests against the high cost of living was an appeal to companies to pay special year-end bonuses that he promised would be tax-free.

The list of helpers lining up to deliver the gifts - cash bonuses of up to €1,500 (S$2,350) - is growing fast and includes some of the country's biggest companies, from Total, to luxury groups LVMH and Hermes International, and telecoms companies Orange, Altice France and Iliad.

"For firms that have the means, I encourage them to do it and do it fast," Mr Geoffrey Roux de Bezieux, head of the Medef business lobby said on Wednesday on France Info radio. "French bosses saw what happened. They aren't blind and deaf."

The measure is one of Mr Macron's savviest in his pre-Christmas spree to buy calm on the streets of France. Raising the minimum wage and scrapping taxes on overtime, pensions and fuel will push the deficit wider, but getting businesses to pay a new bonus has little cost for the state.

Making businesses responsible could also defuse anger over low incomes, which until now was focused mainly on Mr Macron himself. There are signs Mr Macron has created a fear of missing out on the festive spirit in corporate France.

"Orange wanted to respond to the appeal by the President to concretely engage in support of purchasing power of its more modestly paid employees," Orange chief executive Stephane Richard said in a statement on Dec 11, when announcing bonuses of between €500 and €1,000 for 20,000 employees.

Some government workers are also benefiting. The state-owned Post Office is spending €50 million to give up to €300 to 200,000 employees.

Police who had to confront Yellow Vests protesters got a €300 bonus, as well as a permanent monthly pay rise of €120 that will be phased in over the first half of next year.

It remains to be seen, however, what French consumers will do with their windfall. Confidence has declined in recent months, even as households began benefiting from cuts to taxes on housing and salaries.

Last month, spending contracted unexpectedly, and this month, sentiment among retailers dropped to a three-year low.

"Consumers may decide to save rather than spend the planned increase in disposable income," said Barclays economist Francois Cabau.

The Yellow Vests movement began early last month as a nationwide series of roadblocks to protest against petrol taxes, before expanding into general anger about the cost of living.

On Dec 10, Mr Macron outlined a series of measures to meet some of the protesters' demands. They included welfare payments to raise the minimum wage by €100 a month, eliminating a tax increase on pensions below €2,000 and no tax on overtime.

There are signs Mr Macron's offers are working, as polls show declining public support for the protests.

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A version of this article appeared in the print edition of The Straits Times on December 22, 2018, with the headline 'French firms help 'Santa' Macron spread holiday cheer with bonuses'. Print Edition | Subscribe