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Wednesday, December 31, 1997 Published at 14:51 GMT

Special Report

Welfare crisis in Europe
image: [ Workers from all over Europe marched in Amsterdam in protest at cuts in the welfare state last summer ]

Workers from all over Europe marched in Amsterdam in protest at cuts in the welfare state last summer

This year has seen protests in many parts of Europe against cuts in the welfare state, or social security system. Many governments say they are no longer able to pay for it and that they want to trim the system back to a much simpler 'safety net', to help only those in the greatest need. The issue is already proving to be a headache for the Labour government in the UK which has met with opposition from its own supporters.

The French Prime Minister, Lionel Jospin, wants to keep the French welfare state intact
The BBC's European Analyst, William Horsley, has been to France and Germany to investigate the welfare crisis.

Workers across Europe have been marching to preserve the welfare state. They see it as part of their birthright to have lifelong protection, from sickness, from joblessness, and from poverty.

But now that is under threat because benefits have sucked up too much of Europe's wealth. Defenders of the welfare state fear that this sickness may be fatal.

European Union leaders are now searching for a leaner social model. They are being forced to cut their spending, or else drown in a sea of debts. This has put the welfare state to the centre stage of European politics.

Welfare Spending

The amount spent on welfare by different countries varies widely but the pressure to make cuts is greatest among Europe's biggest spenders.

At the top of the scale comes Sweden, whose welfare bill is a massive 38% of its national wealth.

In France, 29% goes on social provision and in Germany the figure is 28%.

The lowest proportion, in Greece, is just over 17%.

[ image: The construction industry is n a bad way in Germany and unemployment is at its highest since World War II]
The construction industry is n a bad way in Germany and unemployment is at its highest since World War II
Tony Blair, who came to power in May, put Britain forward as a model of free enterprise, with few state controls.

And Chancellor Helmut Kohl announced a new direction for Germany with cuts in many benefits. But one country, France, has stood against the tide.

France

In June 1997 the socialist leader, Lionel Jospin, won a stunning election victory. One of his promises was to keep the French welfare state intact:

[ image: Tony Blair is working for a slimline welfare state in Britain]
Tony Blair is working for a slimline welfare state in Britain
"Why move towards the unequal global, Anglo-Saxon economic model, instead of French style economic and social equilibrium. I want Europe, but Europe for its citizens. I want Europe, without giving up French interests."

France has a generous array of maternity and unemployment benefits, paid for by taxes which are among the highest in Europe. The system places great emphasis on supporting the family, especially children. The French state subsidises thousands of part time nannies, or child-minders from public funds.

The main payments are these:

$2,400 (Ł1,500) goes to each woman on the birth of her first child

From the second birth, the mothers monthly allowance goes up to $120 (Ł70) per child per month

The mother continues to receive her full salary for six months from the birth of her child

The mother's job is protected for up to three years.

When she returns to work, her children get free nursery or day care, up to the age of 6.

These benefits allowed Corinne Kellner from Strasbourg to give up her job in order to look after her children after the birth of her third son. This was particularly beneficial as her husband's salary was not enough on its own to support them all.

Mrs Kellner now works in a skills training centre outside Strasbourg which is also supported by public funds. The trainees here learn new skills and techniques designed to help French industry match the global competition.

" If I had not had those allowances, I would never have been able to give up work, it was only thanks to the state benefits that I could fulfil the proper role of a mother, helping the children along, at school and with their sports, which I think is really important," she said.

"I hope what the government is doing now, I mean limiting the payments to the richer people, will be a solution - because it would be a disaster if they had to cut the financial support for people on social security, who need it most. The system now is superb - but everyone knows times are bad and we have to make economies" she said.

Germany

Germany's high welfare standards are the envy of its neighbours - but workers are now learning the hard way that their comfortable security net is costing literally millions of jobs.

German builders cost two or three times more to employers than workers from other countries. A German builder's rate is as much as $35 an hour - and more than half of that is made up from welfare contributions - against ill-health, unemployment and contributions for their pensions.

So while the international competition has hotted up, German companies have found it harder and harder to win any contracts.

That has angered Dieter Krevel, who works at a construction site on the Saar river. After 40 years as a skilled construction worker, he now fights for the workers' interests on the works council but more and more he finds it is a losing battle.

He fears that German unemployment, already at a postwar record, may yet rise even higher. In place of the traditional partnership between workers and employers in German industry, he now sees conflict:

"When you consider how the employers have destroyed the jobs market in Germany over the past say, ten years, especially for us skilled workers, you know what's happening is the capitalists are showing their true face. It's really brutal. We used to have a consensus here in Germany, but now, it's gone" he said.

This winter, Germany's construction workers are feeling the extra chill of cuts in their bonuses and holiday pay. The cost of Germany's luxurious social security system has forced the country to make a choice between welfare and work.

Germany is caught up in a vicious circle of ever increasing wage costs, more job losses, and ever higher payments from the state to the growing armies of the unemployed.

The prospects for most of Europe spells more austerity. And some of the leaders who got on their bikes in the streets of Amsterdam last summer want to put the brakes on against that trend.

Britain's Prime Minister, Tony Blair, champion of a more slimline welfare state, streaked into the lead with a comprehensive welfare review. But in the midst of their welfare crisis, the countries of Europe are not heading in the same direction.

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