Socialist candidate Francois Hollande promised to raise France’s minimum wage if he wins next month’s presidential vote as incumbent Nicolas Sarkozy stepped up warnings his opponent’s policies risk punishment by markets.
Hollande, who is extending his lead in polls of voter intentions for the May 6 runoff, said he’ll organize a meeting of unions and employers to set an increase that would be implemented in July.
“We’ll make a little push to catch up what hasn’t been done in the past, though within the limits of the economic situation,” Hollande said today on RMC radio.
His pledge was aimed at the 12 percent to 17 percent of voters who polls show may support Left Front candidate Jean-Luc Melenchon in the first-round ballot in three days. Sarkozy, who wants to cut payroll charges for companies to boost employment, suggested the promise would put France at risk of suffering the increase in borrowing costs now afflicting Spain.
“Everyone in France is aware of what’s happening to Spain,” Sarkozy said in an interview on Europe 1 radio. “It’s the result of seven years of Socialism with the same policies that Mr. Hollande is promoting.”
Spain vs France
The yield on Spain’s benchmark 10-year bond has jumped about 1 percentage point since the beginning of March, touching a record of more than 6 percent, after conservative Prime Minister Mariano Rajoy said he wouldn’t be able to meet deficit targets. Yields rose again today to 5.80 percent after Spain sold 2.54 billion euros ($3.3 billion) of bonds, just above the maximum target for the auction, and its borrowing costs rose.
The yield on the equivalent French notes has gained about 25 basis points in the same period to 3 percent. France sold 8 billion euros in debt today as risks linked to the presidential election also drove up the government’s cost of borrowing.
“We borrow at half the rate of Spain,” Sarkozy answered when asked if investors will avoid French debt regardless of who wins the election. “Have the markets attacked France in the past five years? I have done everything to protect France.”
Sarkozy said his next term would be about “creating a new model for French growth” by cutting labor costs and improving competitiveness.
Sarkozy’s government is targeting a budget deficit of 3 percent of gross domestic product in 2013. The International Monetary Fund said April 17 it’s more likely to be 3.9 percent.
French voters choose between 10 candidates on April 22 and face a choice between the two leading contenders -- almost certainly Sarkozy and Hollande -- in the runoff.
Hollande will come in ahead of Sarkozy in both rounds, two polls published this week showed. The two leading candidates would have support of 29 percent and 24 percent in the first round, compared with 15 percent for Melenchon and 17 percent for National Front candidate Marine Le Pen, according to a CSA poll of 1,005 voters April 16-17. No margin of error was given.
The Socialist’s lead in a head-to-head match grew to 16 points from 14 points last week, according to the poll.
While Hollande has pledged to meet the deficit reduction targets put in place by the current government, his plan forecasts a balanced budget in 2017, a year after Sarkozy. He said today that he would revise the formula on which the minimum wage is calculated to take account of economic growth as well as inflation.
France’s minimum wage, known as the “smic,” is currently 1,398.4 euros ($1,840) a month.
Spain’s former prime minister, Socialist Jose Luis Rodriguez Zapatero, raised taxes in 2010 as the euro zone’s crisis began to bite. In the first years of his term, he eliminated the country’s wealth tax and ran budget surpluses from 2005 to 2007.