Macron's Little Helper CEOs Spread Holiday Cheer With Bonuses

(Bloomberg) -- As 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 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.

Macron's Little Helper CEOs Spread Holiday Cheer With Bonuses

The list of helpers lining up to deliver the gifts -- cash bonuses of up to 1,500 euros ($1,715) -- is growing fast and includes some of the country’s biggest companies, from Total SA, to luxury groups LVMH SE and Hermes International, and telecoms companies Orange SA, Altice France and Iliad SA.

“For companies that have the means, I encourage them to do it and do it fast,” Geoffrey Roux de Bezieux, head of the Medef business lobby said Dec. 19 on France Info radio. “French bosses saw what happened. They aren’t blind and deaf.”

The measure is one of 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.

Festive Spirit

Making businesses responsible could also diffuse anger over low incomes, which until now was focused mainly on Macron himself. There are signs 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 Dec. 11 when announcing bonuses of between 500 and 1000 euros for 20,000 employees.

Some government workers are also benefiting. The state-owned Post Office is spending 50 million euros to give up to 300 euros to 200,000 employees. And police who had to confront Yellow Vests protesters won a 300 euro bonus, as well as a permanent monthly pay rise of 120 euros that will be phased in over the first half of next year.

Confident Consumers?

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. In November, spending contracted unexpectedly, and in December 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. He added that he expects consumer spending growth to slow at the end of the year and that “risks are for a sharper adjustment.”

Macron's Little Helper CEOs Spread Holiday Cheer With Bonuses

The Yellow Vests movement -- named after the visible garments motorists must keep in their cars -- began in early November as a nationwide series of roadblocks to protest against gasoline taxes before expanding into a general anger about the cost of living.

After a weekend of particularly violent protests, Macron returned from a G-20 summit in Argentina and on Dec. 10 outlined a series of measures to meet some of the protesters’ demands. They included welfare payments to raise the minimum wage by 100 euros a month, eliminating a tax increase on pensions below 2,000 euros, and no tax on overtime.

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

But many Yellow Vests dismiss Macron’s efforts as too little, too late and demands have now moved on to include greater use of referendums to decide government policy.

Macron’s one-off bonus also risks angering those who miss out, said Emmanuel Jessua, economist at Rexecode research institute. That’s because large, urban companies are more likely to have the means to participate than smaller businesses in rural areas where the Yellow Vests movement picked up supporters angry about fuel prices.

“It could lead to a feeling of frustration between workers,” Jessua said. “That’s a risk that isn’t neutral in the current climate.”

Christmas may not come soon enough for the French president.

©2018 Bloomberg L.P.