Sarkozy adopts the persuasive approach

President Nicolas Sarkozy promised yesterday to grapple with three of the great sea serpents of social reform in France: pensions, labour law and health policy.

In a significant change from the rhetoric of his election campaign, the President said he would proceed by persuasion and agreement with the trades unions and other "social partners".

During his campaign, he had promised "rupture with the past". In a much-awaited speech on social policy yesterday, M. Sarkozy spoke of "rupture by negotiation" to create a "new contract".

The President pledged, in particular, to reform the generous, early retirement systems for railwaymen and power workers. These special pension deals, which allow railway drivers, for instance, to retire at 50, cost France an estimated ¿6bn (£4bn)a year.

These agreements have become one of the symbols of French resistance to social and economic change. An attempt by a previous centre-right government to abolish the special pensions rights brought France to a halt in the 1995 "winter of discontent".

In his speech, President Sarkozy did not talk of sweeping away the special deals. He said he had ordered negotiations with unions and employers, which would reduce the privileges but "take account of the special characteristics" of each industry. Only if the negotiations failed to agree a package acceptable to the government would he consider imposing a solution by force, he said.

M. Sarkozy also repeated his campaign pledge to simplify French employment law, to make hiring and firing easier while preserving "social rights".

He said he wanted to push ahead with reform of the public health system to reduce chronic deficits, including, possibly, introducing private health insurance for the elderly.

He said he wanted to reduce further the grip of the 35-hour working week in France and planned to merge and reform the country's two systems for helping the unemployed.

The President rejected suggestions, however, that this was the beginning of a retreat from his repeated campaign promises of "rupture" with the "half-hearted" reforms of the past. He would not tolerate an "appearance of reform" and neither would the people of France, he said.

All the same, the speech suggests that M. Sarkozy is not ready to subject his 60 per cent-plus popularity ratings to a combat with the unions. Any showdown over the proposed reforms has been, in effect, shunted into the second half of next year.

With the economy stuttering and no sign of a promised boost in growth from a ¿16bn package of "instant" tax cuts in July, M. Sarkozy has decided an autumn showdown with the unions and the Left would be ill-advised.