French Prime Minister proposes debt relief for railway reshuffle

PARIS (Reuters) – The French government, seeking to end a railroad strike over one of President Emmanuel Macron’s flagship reforms, said on Friday it would write off most of the SNCF rail company’s debt if plans to make the operator more profitable were being implemented.

It remains to be seen whether the unions will support the offer made by Prime Minister Edouard Philippe. A vote is expected in the coming weeks.

If the offer is rejected and the strike continues, it will underscore the deep resentment that persists among more left-wing unions against Macron’s ambitious agenda.

The 40-year-old, who liberalized French coach travel and Sunday trading in a former ministerial post, has relaxed labor protections since taking office a year ago. He also removed a wealth tax, saying the move was necessary to spur growth, earning him the nickname “president of the rich”.

Presenting the government’s offer, Philippe said the state would absorb 35 billion euros of SNCF’s total debt of 47 billion euros ($ 55 billion), mainly generated by investments in the train network. high-speed TGV so admired.

“This will relieve SNCF of most of its debt and give it the financial leeway it needs for the future,” said the Prime Minister.

This is to erase 25 billion pounds from SNCF in 2020 and an additional 10 billion in 2022. This would lighten the load on the railways, but only by moving it to an area of ​​state liabilities that still has to be borne by the taxpayer.

The offer goes to some extent towards the demands of more moderate unions involved in a strike that has cut rail services by about 50 percent for much of the past two months.

The moderates, mainly the CFDT and Unsa unions, praised the concession, saying it showed it was worth negotiating.

The CGT, another influential union but opposed in principle to EU-wide liberalization, said it saw no reason at this time to call off a strike that began in early April.

“The conflict continues,” said Laurent Brun, boss of the CGT railway union.

The reform, the most important since nationalization in 1937, aims to reduce costs and end the hiring of railway personnel – currently 150,000 – on contracts that are more protective than other sectors. SNCF management must find a 30 percent reduction in operating costs.

Opinion polls show a majority of voters support a reform which Macron says is key to SNCF’s survival when EU-wide liberalization ends its monopoly on national rail transport travelers from the end of 2020.

A Macron adviser said on Friday that taking over SNCF’s debt, which is larger than France’s annual defense budget, would increase public sector debt but would not cancel the commitment to maintain the deficit in the ceiling of 3% of GDP agreed by the EU.

Report by Jean-Baptiste Vey; Written by Brian Love, edited by Ingrid Melander and Alison Williams

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