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Last Updated: Wednesday, 14 November 2007, 12:56 GMT
Tensions at heart of French labour strife
By Robert Plummer
Business reporter, BBC News

French President Nicolas Sarkozy's controversial economic reforms certainly struck a chord with the country's voters in this year's election.

People at the strike-bound Saint-Charles railway station in Marseille
The latest strike has brought French transport to a standstill

But although he can claim a mandate for change after his victory in May, his plans to shake up the public sector pension system have provoked an all-out response from transport unions.

This level of militancy comes as little surprise to long-time observers of the French industrial scene.

But even they may be shocked at the full extent of the country's simmering workplace tensions.

In the run-up to this year's voting, analysts at the World Economic Forum (WEF) gave France the worst possible rating in the category of "co-operation in labour-employer relations" - that is, how workers get on with their bosses.

Last year's WEF Global Competitiveness Report found that in this respect, France was bottom of the league out of 125 countries surveyed, giving it the most confrontational workplace environment in the world.

In recent weeks, the new 2007-2008 edition of the report has been published. So have French labour relations become any more harmonious?

In a word, no. The latest WEF survey covers 131 nations, not 125. But France is still languishing on the lowest rung, in 131st place.

Regulation, regulation

Does this matter? Well, it certainly helps to drag down the country's overall rating. France is ranked as the 18th most competitive nation in the world, the same as last year.

But that still leaves it trailing behind the US (1st) and Japan (8th), not to mention other big European Union economies such as Germany (5th) and the UK (9th).

Campaign poster of Nicolas Sarkozy
Mr Sarkozy says he has a mandate for change

What's more, French executives who submitted their views to the survey rated "restrictive labour regulations" as by far the biggest problem in doing business.

Mr Sarkozy's reforms are broadly aimed at sweeping away some of those restrictions, which work well to protect those who are already employed, but do little to encourage firms to take on more staff.

Economists describe the system as a two-tier labour market, with a high level of employment protection and very little turnover.

That offers little hope to the 8.4% of the population who do not have a job - a figure that rises to 22% among the under-25s.

Mr Sarkozy has already given ground on some of his campaign pledges. For instance, his promise to replace no more than 50% of retiring bureaucrats has been softened, so he will now replace 66% of those who retire.

But he insists he will not budge on the reform of the "special regimes", which cover 1.6 million public sector workers' pensions - and which the transport workers are fighting so hard to retain.

Hard labour

The original idea of these schemes was to compensate people whose jobs were unusually dangerous or arduous, allowing them to retire on a full pension as early as 50.

But they were drawn up in an industrial age when rail workers would have been expected to shovel coal to power their locomotives.

Mr Sarkozy says it is unfair to maintain those privileges in an era when much of the heavy lifting has disappeared from such jobs.

He wants those workers to pay 40 years' worth of contributions before they can draw their pensions, as against 37.5 years now.

But in the context of France's highly polarised labour relations, employees see any threat to their lifestyle as the thin end of the wedge.

World's sixth-largest economy
EU's biggest producer of agricultural products
World's biggest wine producer
GDP: 1,779bn euros ($2,233bn) (2006)
Growth: 2.1% (2006)
Inflation: 1.9% (2006)
Trade deficit: 29.2bn euros ($39bn) (2006)
Source: Reuters

In some ways, the high level of French workers' job security has actually served to magnify their feelings of insecurity, since they can see how difficult it is to find another job if you lose the one you have.

That helps to explain their determination in facing down previous governments' attempts at economic reform.

In 1995, strikes and demonstrations forced Prime Minister Alain Juppe to abandon changes to the pension system and other austerity measures imposed in the run-up to European monetary union.

Last year, it was the turn of Dominique de Villepin's government to suffer humiliation, after protesting unions scuppered a law that would have allowed employers to sack anyone under 26 within the first two years of their employment.

This time, Mr Sarkozy points out that he campaigned on precisely these issues - and he sees his victory as strong backing for these changes.

"The French people approved these reforms," he says. "I told them all about it before the elections, so that I would be able to do what was necessary afterwards."

That seems to be backed up by opinion polls - but the trade unions know that in this battle, their prestige is on the line just as much as Mr Sarkozy's.

Commuter misery in Paris
18 Oct 07 |  Europe

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