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June 2, 2003
week France faces the possibility of an all-out transport strike. Unions
are furious at the government's plans to reform the country's generous
pay-as-you go pensions scheme.
They have already fired a
warning shot across the bows of the ship of state but captain Jacques
Chirac and his first lieutenant Jean-Pierre Raffarin are steaming on
The government's thinking is
easy to understand. At present, retirement pensions are funded by today's
workers, whose own pensions will in turn be paid for by the next
generation of wage earners. It is supposed to be a pyramid - with more
workers than pensioners.
But demographics are changing
the rules of the game. As the workforce shrinks and pensioners live
longer, the pyramid, according to one French commentator, is in danger of
turning into a mushroom - a top-heavy burden of liabilities supported by a
slender stalk of resources.
The proposed reforms will mean
French workers working on beyond age 60. The government also wants to
bring the public sector into line with the private sector by extending
their pension contribution period from 37.5 years to 40.
It's not the first time the
French government has tried to reform the pensions system. It did so in
the mid-1990s and sparked a storm of opposition. The protests effectively
wrecked the administration of then prime minister Alain Juppé.
This time Mr Raffarin looks to
have more firepower. Opinion polls show the French are aware of the need
for reform, while the socialists are still trying to regroup after the
hammering handed out at the last election. One of the main union groups
has acquiesced although that appears to have hardened the resolves of the
other two main groups.
Time is of the essence. As the
postwar baby boomer generation moves closer to retirement, future
administrations may find it harder to win political support for reform.
Turkeys don't vote for Christmas.
Nor is the battle in France a
purely domestic affair. Germany and Italy are among those countries with
looming pension problems.
The German chancellor, Gerhard
Schröder, yesterday managed to get the backing of his party for his
Agenda 2010 reform programme - which includes changes to pension provision
- but that does not mean opposition is at an end.
Germany's trade unions may be
looking to take a less confrontational approach than their French
colleagues but they will want a say in what happens. And it would not take
many from the left of Mr Schröder's party in parliament to vote against
the proposals to leave the chancellor considering his future career
A victory for the French unions would resonate powerfully on the other side of the Rhine. This week could be the beginning of a long hot summer.