Pay cut for Frances left wing leadership

France's new left-wing government started work with pledges to combat excessive austerity

French President Francois Hollande. Picture: AFP

PARIS - France's new left-wing government started work on Thursday with pledges to combat excessive austerity but better manage public finances, marking the debut with a 30 percent cut in pay for President Francois Hollande and all ministers.

The sizeable wage reduction was endorsed at a first meeting of the 34-minister team, a day after Germany's government awarded rises to its ministers and Chancellor Angela Merkel, whose pay will overtake Hollande's.

Pierre Moscovici, France's newly-appointed finance minister, set the tone, reiterating Hollande's demand Berlin and other euro zone capitals rework a fiscal pact agreed in March, to add pro-growth measures alongside commitments to deficit reduction.

"What we've said is the treaty will not be ratified as it stands," Moscovici said. "We're firm on this."

With a debt crisis again rumbling louder in the euro zone, the minister, a moderate social democrat like Hollande, went to lengths to say the European push did not mean the Socialists would renege on a pledge to balance the country's books by 2017.

"France is at Europe's heart and we want to stay there," he told journalists at a handover with his centre-right predecessor Francois Baroin.

"We're convinced public debt is an enemy for the country. Our task will be reduce deficits and debt ... this is the task we will address first."

Hollande takes the helm with Europe's second-largest economy at standstill, the unemployment rate close to 10 percent and the euro zone struggling to contain debts that have spooked markets and forced Greece and others into excruciating bailouts.

In a highly symbolic debut, Hollande chaired a first cabinet meeting where the 17 men and 17 women ministers gave the nod to a pay reduction that will trim salaries by 30 percent, knocking the wage Hollande will earn to just under 15,000 euros ($19,100) a month.

The pay cut, implemented by a decree the ministers approved, takes immediate effect and will require a law but be backdated to mid-May in Hollande's case, government spokeswoman Najat Vallaud-Belkacem said.

A government statement said the cuts would reduce the gross pay of ministers to 9,940 euros a month from 14,200 euros and cut the salary paid to both Hollande and Prime Minister Jean-Marc Ayrault to 14,910 euros a month, from 21,300 euros.

The cabinet met on a public holiday at the Elysee Palace, the presidential offices vacated by conservative Nicolas Sarkozy on Tuesday after handing Hollande the country's nuclear codes.

In Germany, which has weathered several years of financial and economic turmoil better than France and far better than the likes of debt-crushed Greece or Ireland, the wage trend was in the opposite direction.

On Wednesday, Merkel's cabinet gave themselves a 5.7 percent rise that will push Merkel's pay up by 930 euros per month from her current base pay of just over 16,000 euros a month.