05 December 2018 11:01:23 IST

A management and technology professional with 17 years of experience at Big-4 business consulting firms, and seven years of experience in high-technology manufacturing, Rajkamal Rao is a results-driven strategy expert. A US citizen with OCI (Overseas Citizen of India) privileges that allow him to live and work in India, he divides his time between the two countries. Rao heads Rao Advisors, a firm that counsels students aspiring to study in the United States on ways to maximise their return on investment. He lives with his wife and son in Texas. Rao has been a columnist for from the year the website was launched, in 2015, and writes regularly for BusinessLine as well. Twitter: @rajkamalrao

The EU’s problems seem to never end

For weeks now, France has been torn apart by the Yellow Vest protests

The European Union’s liberal experiment of high taxes and a no-borders approach to migration has run into a new opponent — its own people, especially from rural areas.

For weeks now, France has been torn apart by the Yellow Vest protests ( Mouvement des gilets jaunes ). This massive civil disobedience movement, opposing taxes on fuel, took a violent turn last weekend when French President Emmanuel Macron was raising wine glasses at the G20 in Buenos Aires, Argentina.

Protesters from around the country descended on the boulevards of wealthy Paris and torched cars and destroyed upscale shops. They congregated by the famous Arc de Triomphe, one of Paris’s most famous monuments that stands at the other end of the Champs-Élysées, home to the presidential palace.

Stark divide

The divide between the rich and poor in the EU, exemplified by France’s ultra-liberal policies, is so stark that commentators have compared the Yellow Vest protests to the French Revolution of 1789 when a different political philosophy was in vogue. Then, France was all about colonial domination, although just 28 years prior, the 1761 French-Indian war had forced the European country to withdraw from the Americas.

During the French Revolution, the financial and social inequities between ordinary people and the rich drove the country’s peasants to fight against the rulers using blood and limb. The issue then was taxes, just as it is today.

Hastening to quell the three-week rebellion, Macron cancelled the small fuel tax increase that triggered the protests. But he is too smart a politician to know that the protests were not just about the tax increase. They were about the very way of French life, which has clearly come to its tipping point.

The French way of life

In France, everything is controlled by the government in a social experiment to help the proletariat — the working class — including farmers and low-skilled factory workers, against the bourgeoisie, the capitalist class, who own the means of production. Many laws in France are bizarre.

The French work week is 35 hours long, the lowest in the industrialised world. An hour worked after that is considered overtime and requires additional compensation. It is illegal for employers to expect workers to respond to emails and phone calls at the end of the workday. The French are guaranteed six weeks of vacation a year.

In France, employees must take maternity and paternity leave. It’s the law. Women can take up to 16 weeks of paid, protected maternity leave. Healthcare is free to all in France.

The French unemployment system is among the world’s most generous. Under the ‘one day worked, one day covered’ rule, French workers are entitled to up to 36 months of unemployment coverage if they are forced out of a job, provided, of course, that they have accrued that many months of paid work in their accounts. The compensation can be as high as 57 per cent of a person’s wages, which, by law, must include any bonuses earned.

The labour laws in France are so strict that it is almost impossible for an employer to lay off an employee.

Cradle to grave benefits

One would expect that in such an environment, the working class would be ecstatic. Yet, it is the working class that organised the Mouvement des gilets jaunes , mostly via Twitter, Instagram and Facebook.

The reasons are not hard to understand. To pay for such a cradle-to-grave benefits system, the government taxes everything to the hilt. Income taxes on people making just €26,818 a year is a whopping 30 per cent. This is your standard bank employee, government staffer or factory worker. VAT is a flat 20 per cent on practically everything that is consumed, with obvious reductions for food items.

A heartbreaking New York Times story this week said that in rural France, most families run out of their income by the third week of most months. They rear chickens and animals in their yards so that they can be slaughtered to put food on the table for the remaining days of the month. Most of these families have no money for fuel during those days, so most cars stay idle.

Is this picture consistent with what we think about when we imagine France? Hardly. France triggers images of the serene Seine, the pristine beaches of the French Riviera, the majestic Alps and the wineries of Bordeaux. The reality, clearly, is different.

Polarising outcomes

That France’s policies are unsustainable should come as no surprise. The country is also a leading nation in the EU and has helped drive similar draconian policies across the 28 member EU zone for nearly 40 years. The bloc has continued to function as an ungovernable union, each member with its own form of government, its own lower and upper houses of parliament, its own chief executive, its own capital, its own flag, its own language and its own fiscal policy, of taxing and expenditure, but with a common currency run out of the European Central Bank. Worse, each has to strictly follow the bloc’s unbending rules about everything, from trade and migration to employment laws and the environment.

Macron’s grip on France is tenuous at best. German Chancellor Angela Merkel, the other EU champion who helped completely change the face of Europe with her migrant policies, has announced that she will not be contest for the post of Chancellor any more. Voters in Austria, Poland, Hungary and Italy are fed up with refugees coming from North Africa and elected nationalist governments with deeply polarising leaders.

Yes, this is the mighty EU today.