Thursday, October 7, 2010

Showdown?

With the announcement that unions in various sectors will launch extensible strikes starting on Oct. 12, the stage is a set for a final test of strength between Sarkozy and labor. This has been expected since 2007 but had thus far been avoided by more or less adroit backpedaling, side-dealmaking, and sheer luck. But a line has been drawn in the sand, and one side or the other will have to give way. The Elysée is banking on the prospect that the strikes will prove unpopular and that there won't be a repeat of 1995, when strikers enlisted the sympathy rather than the resentment of the rest of the population. In these hard times, the financial burden on striking workers may also limit the length of walkouts. Sarko offered a few concessions today for women with 3 or more children and mothers of the handicapped, but the core reforms remain in place. Polls indicate that a majority does not want them, but other polls also suggest that the fundamental rationale for reform--France's very low workforce participation rate for people over 55--is broadly accepted. How much will the French be willing to sacrifice to get a different policy that will inevitably require other concessions? It's hard to say. This is where distance from the terrain becomes a real handicap. I don't have much of a feel for what people are grumbling around the water cooler. From various conversations a mixed picture emerges. Some feistiness mixed with some resignation. If I had to guess, I'd say that Sarko wins on reform but sinks further in the polls as a result of the strikes. And the ministerial shakeup also expected this month will contribute to a picture of lost control and lack of strategic vision.

11 comments:

Kirk said...

Interestingly, on the news the other night, they had a story about the UK, where people are asking to work longer, in some cases even after age 70. It's not just that they have lower pensions; it's that they feel that they get tossed out of the workforce and probably have little to do.

Now one could look at this two ways: the Brits are more boring, and can't imagine a life after retirement, while the French can think of many things to do. (I don't buy that.) Or that the Brits want to feel useful, wheras the French don't give a damn. (I'd lean more in that direction.

The other thing I note is that the French, in some ways, show more solidarity with illegal aliens than with their own children and grandchildren, who will have to pay higher payroll taxes to fund the pensions of this grumbling generation...

Anonymous said...

Many people I've talked to believe the reform will change nothing, since 2/3 people in the private sector are laid off when they reach age 55-57. Stats show that someone over 55 has less than 1% odds of being hired. Therefore, the reasoning goes, the reform would only create new unemployed people age 60-67, and do nothing for retirement funding.
2 Remember, 60 is the minimum age at which you can go, if you accept a reduced pension - the "normal" age without restrictions is 65 - except for "special cases" who were granted this in exchange for a lower salary, such as primary school teachers and train drivers... Therefore people retire anywhere between age 55 and age 65. Most people also point out that days off due to physical problems rise as age goes up, and people over 60 tend to be absent often - sure, some won't quit, but their co-workers sure wish they did. Some point out that in countries such as Great Britain the percentage of people who are declared "disabled" and thus allowed to retire early is very high compared to France.
In their minds, age becomes a disability in itself and so the reform is akin to mass infliction of pain on the already suffering.
And just because it costs money doesn't mean you should cause old people to be in pain day after day.

People on the left point out that if the government just return to 1999 tax rates, there'd be no need for a reform at all, in fact there'd be extra money, enough to clear most of the deficit.

Two decisive factors: the truckers joined the usual suspects (RATP and SNCF) meaning they can block France entirely. Announcements have already been made that the government is making sure there won't be gas shortages, with the resulting effect everybody's now certain there will be. (Remember the 72% who said a month ago that they didn't trust their government? That's one concrete effect of distrust).

(MYOS, part 1)

Anonymous said...

Another factor: yesterday, youthful noise under the windows. Those were "bac pro" students, most of them 17-20, who'd just walked a few kilometers (then taken a bus) to town. Bac pro students are usually very little into strikes and marches, their level of political involvement is very low. (And, oh, AGAIN, right now, a great clamor of a few hundred youthful voices.... sounds like they're back.)

But this time it's not some abstract principle. This time they've come to the conclusion that THEY would have to work from age 17 until age 67, ie., for 50 years, because of rich people in government -- indeed, the bac pro kids are more likely to have short-term contracts and so not enough terms of pension contribution; they also know (since they're already working either part-time or at least 12 hours a week) that the work they'll be doing is physically demanding (A kid: "Seriously, you think I'll be able to drive 10 hours straight when I'm 63, and not plow into your car?" Another one: "yeah right, they'll keep me on when I'm 65, to work on your roof with my cane")
Usually the College-bound lead the strike and pretty much ignore the Bac Pro kids. This time, the bac pro kids march to the other schools, jump the walls, and organize the marches. It's quite unheard-of based on what I know. I keep in mind the 68 and 86 strikes, and the ones against the CPE. Another difference from the usual strikes is that this one is starting in small towns, not in Paris.

Kids on strike is a nightmare:
you can't beat them up (bloody teen = very very angry parent = more people on the street and against your reform), they're not losing money by not going to school, in fact they risk nothing if they're marching as long as nothing gets trashed along the way, they can rally quickly via SMS and Facebook (yesterday's was a "surprise march"), you can't even plan for them, they won't listen to unions or sometimes even reason because fighting for justice is heady for a teen, and finally they have no experience negotiating and highly dislike compromise, so their basic answer is "we want x and we won't stop till we have it", with the certainty they're sacrificing for the good of others so you can't even tell the would-be martyrs they're brats because you're feeding their hero complex. Your only hope is to make it appear like they're being manipulated by teachers (this already failed since the "surprise protest" was spread via text, kid to kid) or completely ignorant (much easier to pull, especially with lycée pro students). But that's thin.

Granted, the area where I am is more restive than
others, with large demonstrations, etc. However, the vocational school kids and apprentices have never marched that I know of. It's also a largely working-class area, so the comments above reflect what people from the middle class in province believe - as a complement to the mostly urban/upper middle class point of view that we can have through conversations with friends.

MYOS (part 2)

Unknown said...

Thanks, MYOS, for the interesting report.

Leo said...

Myos, just a few corrections to your otherwise interesting comment.

The normal retirement age has been 60 since 1982 (Mitterand). Which means that if you have the necessary number of contribution quarters (currently 164 going to 172) you get a full pension at age 60, except for the Tranche C of the retraite des cadres (that is for the portion of annual salary in excess of 132,000 Euros...) where this portion of the pension is discounted until you reach age 65.

What is true, is that if you have not worked long enough for your pension to vest (like many women) you have to wait until age 65 to get a full pension.

Although I did benefit from the income tax cuts implemented by Chirac, I would wholeheartedly accept reverting to the old rates. However there is no way such a move would plug the 35 Bio. Euro pension revenue shortfall. And by a wide margin. Also, it may be a technicality but such increase would not go to the pension system which is not funded by the national government. It will be necessary to plug the national budget hole.

I hope you joked by stating that train drivers got a better pension deal to compensate for sub-par wages. I guess most factory workers would love such low wages.

One little known fact is that while the average age at which people stop working for any reason (including unemployment, business or government sponsored pre-retirement schemes, disability, vesting of pension rights, is 58.8) the average age at which employees go on retirement with their pension is 61.5. Which means the extension to 62 will have a marginal effect. Its the increase in the number of contributing quarters which will change things. While one can legitimately argue that the effect on the lives of those affected will be the same, it is ironic that the larger Unions and the Socialist party are accepting the number of quarters increase while focussing their ire on the age, which is almost irrelevant.

Latest news on the radio is that some oil refineries local unions have decided on a renewable strikes, which heralds some pretty painful days ahead of us. The larger union headquarters are being overtaken by their base. Never a good omen.

Anonymous said...

Hi Leo, Thanks for your comment.

No, I was not joking. I did check into it (talked with union leaders but...) and at some point in the past, lower retirement age was given in exchange for lower salary (or non-increase, depending on the case). It was cheaper for the government to promise early retirement than to give extra salaries.

The fact that the SNCF salaries are now quite good is irrelevant to the way the retirement age was reached. (Some SNCF workers also got their special retirement age because they had to be on call for heavy duty work throughout the night.)


Parenthesis: I'd say SNCF salaries are merely normal-level for their type of work, whereas many French salaries are abnormally low, sometimes to the point of being absurd by non-French standards: young people with business degrees routinely start around 24,000 euros a year, school teachers start at 12,000 euros a year - and we're talking jobs that require college degrees!
Apparently the 35hweek kept salaries artificially low and then for some reason they stayed stuck there. A family of 4's median income is 2,300 euros/month, 27,600 a year, which is quite low. (at 27,600, an American family of 4 would NOT be considered "middle class". Far from it.)
End of parenthesis.

Yesterday 2 SNCF workers were interviewed: One said "why should I strike now, my pension plan is not concerned by the reform and I don't have to worry about it till 2017" while the other said "I don't especially want to lose money but many people will be losing 2 years and they can"t do anything for fear of losing their job, so I have to do it."
The second one sounded more compelling, you know? And the first one sounded selfish.
It's a French twist on the strike narrative :)

Might explain this:
http://www.lefigaro.fr/flash-eco/2010/10/09/97002-20101009FILWWW00356-71-des-francais-favorables-a-la-greve.php

Youth: they're still very inarticulate and disorganized. Apparently the college prep schools have not joined in (yet?) because these kids tend to be eloquent. Luc Chatel warned them that "marching can be dangerous." The pronouncement had a profound impact, as you might expect.
Being more cynical, I wondered whether he was saying that the police will be allowed to beat them up? (But the equation still seems to hold, bloody teen = angry parent, so ???)
Also, some kids tried to replicate the "fire in can" image they'd seen continental workers (and others) do - another sign they're associating with factory workers, not with university students- and succeeded in lighting up three classmates, one of whom is in very bad shape.

Anonymous said...

Re: returning to the old tax rates - I'm not saying it's the truth, just that it seems to be held as truth among those who've heard it and who clearly lean left.

Anonymous said...

Oh and in the meanwhile, Martine Aubry is in the hospital - a while back she stuck a pen into her eye (?) and she was admitted to the hospital for something rather severe deriving from that. Therefore she could not attend "A vous de juger", a big political program, she could not attend the PS convention (not a big loss in my opinion, I don't know why they're even having it), and can't attend the protest on Tuesday. Not a good omen for the presidential campaign.

Leo said...

Myos,

thanks for the clarification.
I would not argue with you that the current hierarchy of salaries (in France and most other western countries) is right but the comparison of French and US salaries is a bit unfair let alone a bit irrelevant.

First the US GDP per capita is 37% higher than the French (at Purchasing Power Parity - source World Bank). If you factor that in, the equivalent of 27.6K Euros for a family of 4 will look like 47 K$. In 2007, the US family median income was 50K. Sounds pretty similar to me.
If you added the cost of healthcare which is not included in income, 27K Euros might even look more middle class than the US figure.

I'm not intending to nitpick, but "middle class" is a relative notion. A family with 15K$ would definitely be middle class in Bangladesh while it would be under the poverty line in the US (21.7K).

On SNCF wages it was probably true a few eons ago. However we have to fix now the future of pensions. And while I have no problem with the train driver defending his beef it would have been productive to inject facts which have been painfully lacking in the pension debate. Whose fault? I guess everybody's: the Government, the Unions and the Media.
This is just another illustration of my compatriots' crass ignorance of (or disdain for?) of simple economic facts.

Anonymous said...

About the kids walking out and the ominous "marching can be dangerous", from a journalist who keeps a blog.
I'd say he's pretty anti-government.
http://www.plumedepresse.net/retraites-chatel-met-en-garde-les-jeunes-contre-la-police/

Anonymous said...

(MYOS)
"Marching can be dangerous" has spawned a series of sarcastic tweets and slogans. Kids are trying to outdo each other with the most absurd warning. One said "Marching makes your hair fall out", another "March and Jean Sarkozy will become Prime Minister"...
http://www.lepost.fr/article/2010/10/12/2260740_si-vous-manifestez-jean-sarkozy-sera-nomme-premier-ministre_1_0_1.html
(not sure whether the political parties jumped onboard or started it, but based on the Ps' usual "cool factor" I'd think the former).