French union threatens more action against welfare reform



There were fears yesterday of renewed labour unrest in France as the CGT trade union - one of those at the forefront of the strikes last November and December - called for a national ''week of action'' starting on 5 February. The union said it wanted to force the complete withdrawal of the government's plans for welfare reform.

The franc immediately fell at the news; the success of the retrenchment plans is essential to French hopes of joining the European Monetary Union by the 1999 timetable.

The CGT's call came on a day when the government put into place the first main elements of its controversial reform, approving two sets of measures designed to restore the welfare system to financial soundness. A third element, the constitutional amendments required to give parliament ultimate responsibility for welfare spending, should be approved today.

Both the union's call to arms and the details of the measures seemed to give the lie to the view, canvassed in the French media, that the intended overhaul of the welfare system had been emptied of all its worth by the compromises forced on the Prime Minister, Alain Juppe.

As the price for securing an end to the strikes, Mr Juppe conceded almost all aspects of the reform that lay outside the immediate control and restructuring of health and welfare spending. He abandoned the review of public sector conditions and pensions, postponed a reform of income tax, shelved the restructuring plan for the national railways and approved more money for universities.

In subsequent compromises, the doctors forced the withdrawal of a tax of 1 franc on all prescriptions they issued; opposition from inside the majority Gaullist coalition then forced a month's postponement in the introduction of a new tax to pay back the accumulated debt of the welfare system and the abandonment of plans to tax family allowances.

What remains, however, is not inconsiderable. The constitutional amendments provide for parliament to have the last word on welfare spending, rather than a joint committee made up mainly of trade union and employers' representatives.

At present, the government sets spending guidelines for the committee, but no more. In future, whatever ceiling is set should be enforceable by parliament.

Parliament has insisted on oversight of the welfare system's revenue, as well as its spending. The receipts, which amount to more than the state budget, are the province of the joint welfare commission.

There are to be financial sanctions on doctors who spend beyond the budget limits set by the government. The freeze on family allowances for 1996 was also confirmed.

But it is the special tax to repay the welfare debt - known as the RDS (remboursement de la dette sociale) - that will come as the greatest shock and could fuel the unions' call for action. The RDS comes into force next month: a 0.5 per cent levy on all income.