Budget cuts spark strikes on both sides of the Rhine

Both France and Germany seem to be heading for a fresh wave of labour unrest, sparked by threatened government budget cuts to prepare for European monetary union.

An estimated 12,000 people marched through Paris yesterday to campaign for a reduction in working hours. There were also demonstrations in other French towns, as well as a strike at the national railway (SNCF). The Eiffel Tower was shut for the fourth consecutive day.

Yesterday's strike action was called by the CFDT union because of delays in signing agreements between the unions and employers' organisations over the reduction in working hours. According to an earlier agreement signed by unions and the Centre National du Patronat Francais (CNPF), accords should be met in more than 100 sectors by 30 June.

The CNPF believes that "a large, general and obligatory reduction" in working hours will have catastrophic effects on productivity. But the government seems to be on the side of the unions. President Jacques Chirac recently told the CNPF president, Jean Ganclois, that "you can do much better on the issue of working hours", and the Prime Minister, Alain Juppe, is threatening to change legislation if the discussions between unions and the employers organisations do not advance.

Yesterday's action served as a test for union leaders, who wished to check the mood of members. "We're getting up speed for the other strikes and days of action," said the CGT union leader, Louis Viannet.

The next few weeks will see a surge of social unrest in France. Yesterday's action was sparked by Mr Juppe's comments last week that there was "excess fat" in the public sector.

A day of action has been called later this month for the defence of public services. This will be followed by a strike at France Telecom on 4 June and at the electricity and gas operator, EDG-GDF, the following day. Both are to protest about threatened privatisation plans. These stoppages should be overshadowed by the day of action by railwaymen and civil servants on 6 June to protest against cuts in public services.

There is also trouble on the other side of the Rhine. In Germany, talks aimed at ending public sector strikes that have disrupted transport and communications across the country for the past week broke down yesterday, with the unions condemning the government's offer of a half per cent pay rise as "provocative".

But commuters are likely to be spared more disruption in the foreseeable future, as the two sides will take the dispute to arbitration. During that period, approximately three weeks, no industrial action is allowed under the country's labour laws.

If arbitration fails, the union's 1.7 million members could paralyse transport, postal services, hospitals and government offices. However, the government has little scope for concessions, as the projected budget deficit for next year is already larger than allowed under the Maastricht criteria for European monetary union.