VIEW FROM PARIS : Free lunch served up in the electoral cafe

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The Independent Online
"There are definite signs around the world that the excessive rate of growth in manufacturing is causing some strain on physical capacity"

Four men in Paris city uniforms stop by the tree outside the cafe window on this pleasant spring afternoon. One lifts up the grille around the base of the tree, another sweeps the litter that has collected beneath it into a pile. The third scoops up the rubbish and a fourth holds open the black bag. And France still has more than 3 million jobless.

Unemployment is a central issue in the presidential election campaign. The social effects of an unemployment rate of 12.3 per cent have become visible as never before. It is impossible to overlook the loud appeals of beggars on the Mtro, or to ignore the fact that one young person in four has no work.

Yet there are two sets of discussion about the unemployment problem. There are the remedies the presidential candidates debate in public, and there are the policies observers reckon any of them would have to introduce after the final round of the election on 7 May.

One of the public panaceas is the notion of a cut in the working week on the theory that firms would then create new jobs. Edouard Balladur, the prime minister, maintains a dignified silence, but his rival, Jacques Chirac, and the Socialist candidate, Lionel Jospin, appear to favour it. Economist Charles Wyplosz at the business school Insad outside Paris said: ``It is the dream of a free lunch, but the candidates are playing to public opinion.''

A second suggestion in the public arena is that after 10 years during which the distribution of national income has tilted away from wages and towards profits, the time has come to award bigger pay increases. Candidates Jospin and Chirac argue that this would give an old-fashioned stimulus to demand and thus create jobs. Professor Wyplosz says: ``This is more demagoguery. It is wrong to think that taking wages away from profits would have no adverse effect.''

A point on which economists and politicians can agree is that reducing long-term unemployment will also require structural reforms. But even this has its taboo subject - the minimum wage. The evidence is that it makes little difference to the over-25s, but does price the young and poorly qualified out of jobs. The minimum wage and additional contributions come to about Fr9,000 (£1,170) a month, but previous attempts to trim it have brought rioting students onto the streets.

Politicians appear reluctant to discuss ways of cutting the government's growing financial deficit, even though this will have to be done to meet the Maastricht treaty requirements. Privatisation receipts helped to cut the 1994 headline deficit - excluding these, the shortfall rose from Fr341bn to Fr349bn. Strong growth this year - most forecasters expect a rise of more than 3 per cent - will help to close the gap. But the most likely solution to government finances in the red to the tune of more than 5 per cent of national output is higher taxes.

According to Stephen King, European economist at James Capel: ``After the election the French government will have a tremendous opportunity to sort out the fiscal problems. If they fudge it, it would carry dangers for the financial markets.''

Two weeks ago, Jacques Chirac made remarks that the markets seized on as evidence that he was semi-detached from the monetary union bandwagon. The result was a vicious attack on the franc. Since then, the candidates have maintained a cautious radio silence on the question of whether interest rates should continue to be used to defend the franc at all costs.

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