‘La French Tech’ Arrives Under Macron, but Proves No Panacea

PARIS — In full Steve Jobs fashion, French President Emmanuel Macron donned a black turtleneck in January and caught on Twitter to celebrate the creation in France of 25 “unicorn” start-ups, companies with a market value of more than 1 billion euros, or nearly 1.1 billion dollars.

He said France’s start-up economy was “changing the lives of French people” and “strengthening our sovereignty”. It was also helping to create jobs: unemployment fell to 7.4%, the lowest level in a decade.

The start-up boom was a milestone for a young president elected five years ago as a restless disruptor, promising to open up the economy and make it competitive in the 21st century.

To some extent Mr Macron has succeeded, attracting billions of euros in foreign investment and creating hundreds of thousands of new jobs, many of them in tech start-ups, in a country whose resistance to change is stubborn. . But the disruption is just that, and the president has at the same time left many French people feeling unsettled and unhappy, left behind or ignored.

As Mr Macron seeks re-election from Sunday, two countries will vote – a predominantly urban France that sees the need for change to meet the great technological and economic challenges of the time, and a France of the “periphery”, suspicious of innovation, struggling to get by, alarmed by immigration and resentful towards a leader perceived as embodying the arrogance of the privileged.

France, which will present itself in greater numbers at the voting booths, will determine the result.

In many Western societies, the simultaneous diffusion of technology and inequality has posed acute problems, stoking social tensions, and France has been no exception. If disenchanted France wins, Marine Le Pen, the perennial candidate of the nationalist right, will most likely win too.

Worried that he has lost out on the left by promoting start-up entrepreneurship and market reforms, Mr Macron last week escalated appeals to the left, resorting to phrases like “our lives are worth more than their profits” to suggest his perceived lurch to the right was not the whole story.

He told France Inter radio that ‘fraternity’ was the most important word in France’s national motto and said during a visit to Brittany that ‘solidarity’ and ‘equal opportunities’ would be the themes. central to a possible second term.

The pledges sounded like signs of growing anxiety over the election outcome. After several months during which the re-election of Mr. Macron had appeared almost assured, the gap between him and Mrs. Le Pen has closed. The two leading candidates in Sunday’s vote will advance to a run-off on April 24.

The election will largely be decided by perceptions of the economy. In favor of Mr Macron, the country rebounded faster than expected from the coronavirus shutdowns, with economic growth hitting 7% after a devastating pandemic-induced recession.

The most significant cultural transformation has come in the area of ​​technology, where Mr. Macron’s determination to create a start-up culture centered on new technologies has brought about changes that the government considers essential for the future of France.

Cédric O, the Secretary of State for Digital, dressed in jeans and a white shirt, no tie, admits to being obsessed. Day after day, he traces the future of “French tech” from his spacious office in the Ministry of Finance.

Five years ago it might have seemed like a pipe dream, but something has happened. “It is vital to be obsessed because the risk that France and Europe face is to be driven out of history,” said Mr. O, 39, using a phrase often used by Mr. Macron . “We have to get back into the international technological race.

To that end, Mr. Macron opened Station F, a gigantic incubator project in Paris representing the ambitions of French start-ups, and earmarked nearly 10 billion euros in tax credits and other incentives to attract research activities and artificial intelligence companies. A new bank has been created to help finance start-ups.

The president invited and dined business leaders from multinational corporations, creating an annual gathering in Versailles called “Choose France”.

Since 2019, France has become the top destination for foreign investment in Europe, and more than 70 investment projects worth 12 billion euros have been pledged by foreign multinationals at the Versailles rallies, Franck said. Riester, French Minister for Foreign Trade.

Over the past four years, IBM, Germany’s SAP and DeepMind, the London-based machine learning company owned by Google’s parent company Alphabet, have increased their investment in France and created thousands of jobs.

Facebook and Google have also strengthened their French presence and their artificial intelligence teams in Paris. Salesforce, the American cloud computing company, is moving forward with more than 2 billion euros in pledged investments.

“Macron brought a change of culture where France suddenly opened up to the world of donors,” said Thomas Clozel, a doctor by training and founder in 2016 of Owkin, a start-up that uses artificial intelligence. to personalize and improve medical treatments. “He made everything easy for start-up entrepreneurs and thus changed the vision of France as an anti-capitalist society.”

François Hollande, the predecessor of Mr. Macron’s Socialist Party, said in 2012: “My enemy is the world of finance”. As a result, Mr. Clozel said, obtaining funds as a French start-up was so problematic that he chose to incorporate in the United States.

Not anymore.

“Today I am thinking of reintegrating back into France,” he said. “The ease of dealing with the government, the consortium of start-ups helping each other and the new pride in French technology are compelling.”

Start-ups that have had a significant impact on the lives of French people include Doctolib, a website that allows patients to book medical appointments and tests online, and Backmarket, an online marketplace for tech gadgets. reconditioned which has just become the most valuable start-up in France. , at $5.7 billion.

They started life before Mr Macron took office, but have grown exponentially over the past five years.

“I’ve made 56 investments in the past two years, 53 of them in France,” said Jonathan Benhamou, a French entrepreneur who founded PeopleDoc, a company that simplifies access to information for human resources departments. .

Now funding new ventures and focusing on a new start-up called Resilience in personalized cancer care, Mr Benhamou credits Mr Macron with “giving investors confidence in stability and creating a circle virtuous”.

Talented engineers no longer go elsewhere because there is an “ecosystem” for them in France, said MO

Mr. Macron insisted that opening up the economy is compatible with maintaining protections for French workers and that the arrival of French tech does not mean the adoption of capitalism without limits behind the turnover of American creativity.

Despite the president’s overhauls, France remains one of the most expensive countries for payroll taxes, according to the Organization for Economic Co-operation and Development, with hourly wage costs of nearly €38, close to levels seen in Sweden. , Norway and other northern European countries.

“We know we have to go further,” said Mr. Riester, the foreign trade minister, in a recent interview. “We still have brakes that could be removed from the economy, and we need to cut red tape in the future.”

“But we are also confident that we will maintain a different system from the United States,” he added. “It’s our culture and our history, and ultimately we think it might be better for attracting talent from around the world.”

Before Mr. Macron’s election, unemployment hovered around 10%, growth was sluggish and a wealth tax, among other fiscal measures, had deterred foreign investment. France was widely perceived as an anti-entrepreneurial nation.

Mr Macron cut France’s corporate tax rate from 33% to 25% and introduced a 30% flat tax on capital gains. He simplified the labyrinthine labor code, making it easier to hire and fire. His government funneled billions of dollars into retraining programs and made it harder to maintain unemployment benefits.

These policies have stimulated the economy while generating a lot of hostility towards the president in a France still deeply attached to its system of social solidarity. It’s a country that tends to believe that if work has its place, the quality of life must hold a greater place. The anger and alienation that sparked the Yellow Vest movement in 2018 still lurks just below the surface.

Mr Macron’s campaign proposal to raise the retirement age from 62 to 65 – rejected by Ms Le Pen – was met with widespread outrage.

While entrepreneurs are creating new businesses faster than ever, many jobs are precarious. Delivery people from UberEats, Deliveroo, Amazon and other online shopping portals have little income security and few benefits. A number of French industries remain struggling, despite Mr Macron’s wishes to forge a manufacturing revival.

The turmoil in these sectors of the economy runs deep, and that is where Mr. Macron is vulnerable.

A sharp rise in the cost of living, due in part to Russia’s war in Ukraine, has quickly become one of the biggest problems facing candidates.

During a recent visit to a working-class district of Dijon – one of the few campaign stops by a president who has often seemed more concerned with discussing the war in Ukraine with Russian President Vladimir V. Putin than talking about the impending elections – Mr. Macron was harassed by the crowd.

“You don’t realize,” one man said. “Put yourself in the place of a French family. Shopping, paying for gas, it’s horrible!

Asked by a woman how it was possible to survive on the minimum government subsidy of around $620 a month, Mr Macron said: “I never thought that giving a check to people in distress was the way to go. to solve their problems.”

On the contrary, he said, the key was to find ways to help them re-enter the labor market.