Strikers invade the runways at Orly

France at a standstill: Franc battered by eighth day of stoppages and protests against Chirac's welfare reforms

France's worst labour unrest since 1986 spread to Orly airport in Paris yesterday when 200 Air France ground personnel occupied two runways, stopping planes from landing and halting domestic and transatlantic departures. It was the first time that air traffic had been disrupted since public- sector workers and students launched a wave of strikes and demonstrations eight days ago in protest at the government's plans to reform the welfare state and curb state spending.

"France needs to work. Our economy is still convalescent. The government is determined to carry out the reforms it has announced, because it is a question of survival," the government spokesman, Alain Lamassoure, said in a statement warning that many companies would start to lay off workers if the strikes continued.

President Jacques Chirac's government must implement its austerity programme if France is to reduce its budget deficit sufficiently to meet the Maastricht treaty's conditions for joining a single European currency in 1999. French stocks and bonds slumped yesterday and the franc fell a centime to 3.4625 to the Mark as financial markets weighed the impact of the strikes on France's chances of meeting the criteria on time.

Even before dawn, the Paris region was locked in traffic jams that extended for more than 200 miles as commuters sought a way round the strikes paralysing public-transport systems. The state rail network was almost completely shut down, there were no buses or Metro services in the capital, and thousands of Parisians cycled, roller-skated and walked to work.

The social unrest turned violent on Thursday night when about 30 people were injured in clashes in Paris and the western city of Nantes between riot police and youths throwing stones and petrol bombs. The clashes broke out on the fringes of protests organised by students who are demanding more resources for underfunded, overcrowded universities.

Employees in the education and health sectors are set to join the strikes on Monday, along with tax officials, customs staff and workers in the telecommunications industry. Unions at the Bank of France have called out its 20,000 staff for a two-day strike next Thursday and Friday.

Government officials said they had no intention yet of mobilising the army to help Parisians overcome the transport strikes. During a similar crisis in 1988, the authorities used 350 army trucks to take people around the city.

With the strikes breaking out so close to Christmas, Mr Chirac and his Prime Minister, Alain Juppe, may be calculating that public exasperation will increase to the point where union leaders will feel compelled to call off their protests. The President has the power to dissolve the National Assembly and call a snap election or referendum on his policies, but his aides say such extreme action is unnecessary at the moment.

Government officials say that, while it may be possible to make more money available for universities, there must be no watering down of the plans announced by Mr Juppe last month for a fundamental overhaul of the social-security system. The system pays for health care, pensions and family allowances and, like the SNCF state railway network, is buried under a mountain of debt.

The government's aim is to restore order to the public finances so that the budget deficit falls to 4 per cent of Gross Domestic Product next year and 3 per cent in 1997, enabling France to qualify for European monetary union. But the government's ability to meet these targets depends on the accuracy of its predictions for economic growth, and most economists believe these are too optimistic.

The government has forecast 2.9 per cent growth this year and 2.8 per cent in 1996, but few independent economists believe that growth will exceed 2.5 per cent this year and 2 per cent in 1996. The latest strikes are certain to weaken the economy by depressing output and could even result in a contraction of GDP for the last quarter of 1995.

All this means that the government may have to announce still tougher austerity measures to meet its budget-deficit targets, a policy that runs the risk of provoking even more extensive labour unrest. "The risk remains that the austerity package will depress private spending more than expected, making deficit reduction even more difficult," said Jean-Francois Mercier, an economist at Salomon Brothers.

France's determination to meet the Maastricht conditions and launch the single currency on schedule also implies delaying an assault on unemployment, currently at 11.5 per cent. Mr Chirac won the election on a pledge to make job creation his priority, but switched course in late October to a strict diet of budgetary discipline.

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