`Social summit' leaves French still divided

MARY DEJEVSKY

Paris

There was general unhappiness among trade union leaders and employers yesterday about the outcome of Thursday's marathon ``social summit'' which, they judged, had produced no important concession from the French government on its plans for welfare reform and insufficient measures to stimulate the economy. However, the Prime Minister, Alain Juppe, insisted the meeting had been ``positive''.

The ``summit'' - one of the demands made by the unions as the price for ending three weeks of nationwide strikes and protests - had broken up in the early hours of Friday morning without any formal agreement - prompting Opposition scorn about mountains giving forth mice. A document drafted by Mr Juppe had been rejected by unions and employers and the status of summarised ``conclusions'' released later by Mr Juppe's office was unclear.

The different assessments reflect the divergent expectations of unions, employers and ministers. But short of a triumphant deal on industrial and social peace, the outcome was probably as good for the government as it could have wished. Mr Juppe managed to preserve his welfare reform intact, including the levying of a new tax from 1 January, intended to pay off the welfare system's accumulated debt, without provoking any new strike call from the unions.

His four-point plan for economic growth, which includes encouragement for house-buyers and other measures to encourage consumer spending, will cost the government almost nothing and all other decisions - including how to meet a target of 250,000 jobs for the young unemployed - have been delegated to three more summits next year.

With all the strikes - except a few in regional electricity and postal services - ended, even the most militant unions are in no position to resume their action immediately. The prospects for long-term harmony look less bright. Discontent remains high, especially in the public sector, and there are widespread predictions of renewed unrest in the New Year.

The "summit'' also did nothing to clarify the signals being sent by the government on its economic priorities. In June, Mr Juppe launched an expensive - and so far ineffectual - job creation programme. In August, he raised VAT by 2 per cent - a move likely to depress spending. In October, President Jacques Chirac said his ``absolute priority'' was cutting the budget deficit, but now Mr Juppe is talking about stimulating spending again.