The Hindu Business Line : `Work to live' is more their motto

AS I move around Paris, the banners in the streets proclaim support for the city's bid to host the 2012 Olympics. Even the Eiffel Tower has a sign that says `Paris 2012, Ville Candidate' followed by the five interlocking rings.

Paris is competing for the honour (or the pain, if you ask a cynic) along with London, Madrid, New York and Moscow. The French are putting their best foot forward, but not everything is under their control.

Definitely, the unions are not and just over a week ago they decided to go on strike, the very day the 13-member International Olympic Committee was visiting the city to check out its facilities.

Several unions joined the protest and there were transport stoppages, walkouts in government offices, schools and public utilities, and a mass protest march.

Paris has already hosted the Olympics in 1900 and 1924 and is considered a frontrunner for 2012. It has a great rapid transit system, and many of its sports facilities are already in good shape.

France told the IOC (international Olympic committee) that the strikes only show that democracy is working is working here. Not that the IOC cares. When the committee was visiting Beijing to evaluate that city as a potential Olympics venue, the communist government was able to issue an edict (and ensure that it was followed) that all odd numbered vehicles stay off the road giving the impression that traffic was not a problem in Beijing!

In Paris, the IOC committee will have discovered that a commute that normally takes 10 minutes may take half an hour when democracy is working. It must have been a strategic choice for the unions to strike on that day, one beset with high risk.

Unions in France are numerically small (accounting for 8 per cent of the workforce in the private sector and 26 per cent of the public sector) but are politically powerful. Olympic Committees usually like to check out how traffic moves and how good the public transport system is.

By disrupting public transport, the unions wanted to demonstrate their power to disrupt life, even when the risk is high. One large union, the CFTC, played it safe and asked its own members to restrict their protest to work stoppages, and not to join marches, so as not to harm the bid.

Most news reports about the strike in France are worried about its impact on the Olympics bid. Yet the problems facing France are more serious and fundamental. The protestors were rebelling against various proposals of the government on the economic front.

While the IOC only saw the strikes in Paris, some form of protest was said to be taking place in over 50 cities in the country.

But France is a land of strikes and it can almost be considered a national pastime. On March 9, scientists all around the nation protested a proposed law that would provide more state funding for research, which the protesters felt was inadequate.

The previous day, students were on strike in a peaceful protest against reforms in the curriculum. The government of President Jacques Chirac (which leans to the right of centre) had promised a law guaranteeing a minimum service during strikes but the unions in France with support from the socialist opposition appear to have prevented the government from doing so.

Much is at stake, though. The discontent among the trade unions is with regard to proposed reforms to France's welfare system and labour laws. The government is trying to control its deficit so as to bring it within European Union limits, and also wants the people to contribute more to their health care and make the state pensions less generous. France currently enjoys a 35-hour work week and the public sector workers oppose plans to reform this. (The 35-hour week is of fairly recent origin and came into effect in February 2000.) In addition, the unions are also demanding pay hikes.

Basic structural reform is not a medicine that is administered only to the developing world by the IMF. Germany and France appear to be in need of the same.

When times were good and given their welfare state leanings, countries in Europe gave their citizens liberal benefits. Education in France is free and managed by the government.

The French enjoy high quality and liberal medical benefits for all, long-term unemployment benefits, and minimum income guarantees. People over 25 receive a minimum income of about $9,000 (Rs 4.05 lakh).

The government even sends a check to all citizens with children to cover the cost of books. The current retirement age is 58 ½ years but a public sector employee can retire as early as 50 years with full retirement benefits, which are based on the last six months pay. If you are used to all these benefits, wouldn't you go on strike to protect them?

Unemployment and retirement benefits consume as much as 30 per cent of the GNP. France's pension system is not sustainable, since it relies on present day workers to pay the present day retirees. With current demographic trends, workers will have to pay more, or retirees will get less, or the retirement age needs to be raised.

The fourth quarter of 2004 showed that the economies of Germany, Italy, and Netherlands shrank. Forecasts for the euro-zone show that it will only grow around 1.5 per cent in 2005. Although the introduction of the euro went very smoothly, its contribution to growth, one of the expected benefits, has not occurred. In addition, the strength of the currency against the dollar is dampening exports. Unemployment in France has risen above the 10 per cent level.

One of the reasons for the poor performance of countries in Europe is attributed to laws and regulations that make it difficult for companies to fire workers, making many of the companies reluctant to invest domestically. French foreign direct investment in the US, for example, has tripled in five years and is second only to the UK.

Unemployment in Germany is also high. German manufacturers such as Daimler Chrysler and Siemens have managed to increase the working week to 40 hours without a wage hike, in return for guarantees that jobs would not be cut or production moved to cheaper locations.

The nature of the world economy today, with competition from newly industrialising countries means that countries with liberal welfare benefits are under pressure to reform.

The French, in particular, would find it hard to give up the style they are used to since they do genuinely believe that we work to live and not the other way around.

European countries, with their paternalistic approach, have for long offered a softer alternative to the American business model of individualism and autonomy.

Different societies make different choices of the way they live and it would be a pity if the European governments feel they have to give up their softer version of capitalism due to globalisation pressures.

(The author is a professor of international business and strategic management at Suffolk University, Boston, US. His Internet address is cgopinat@suffolk.edu.)

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