While Europe rewards its workers Britain still relies on fear

THERE IS a part of France's Mediterranean coast that I used to know well. Not the traditional Riviera, but the smokier, more urban stretch further west towards the Rhone delta: Marseille, the naval port of Toulon, the smaller coast towns between them such as Cassis or la Ciotat with its shipyards. For no good reason I had not been back there for six or seven years, although a large family of French relations lives in the region. The other day, I returned for a funeral and, driving about between the homes of relatives, the church and the cemetery, I had a chance to register against my memories what had and had not changed.

The family had not changed much. They were the same high-spirited, pious mavericks I remembered. Steam trains and world Communism had gone, computers and the European Union had come, but they were still talking about who did what in the German occupation, still snapping up tiny patches of land, still keeping their money under the bed in case - by putting it in the bank to earn interest - they committed the sin of usury.

But their country, in contrast, had altered so much that it stunned me. The huge physical outlines remain: the white limestone mountains behind Marseille and Toulon, the coastal lagoon of the Etang de Berre, the Rhone itself. Within those outlines, though, all details and colours and textures are changing.

Marseille and its surroundings now resemble the screen of a "SimCity" urban-planning computer game. Industry is pouring out of Marseille, over the jagged ridges behind it and down into the surrounding country. The results are that the city is stripped ofits tax income, that anarchic sprawl-and-shanty communities are spreading like lava all over the inland valleys, and that public transport nightmares arise as commuters who once travelled from villages to work in Marseille are replaced by commuters who live in Marseille but can now find work only beyond the city boundary.

Somehow the flamingos survive in the Etang de Berre, although the lagoon's water was already fouled by the oil refinery when I was a student near here. Now the filth is multiplied by the modern factories lining the water's edge, and by the gigantic new steelworks at Fos. A new steelworks, in western Europe? Certainly, said one of my nephews, and it is flourishing. Its director was even called in to advise Port Talbot, the ailing South Wales steelworks, and came away shaking his head. "Too far gone! Theyhave fired too many people who knew the job, and the wages are absurdly low. Quel dommage . . !"

All this invited comparisons with Britain - most of them sombre. This part of France, at least, is in a phase of prodigious economic growth. The western Provencal coast is turning into a new California, as entrepreneurs and skilled workers stream in fromother regions of France to a place that is booming, that has plenty of sun and scenery, and is now much more accessible (the TGV high-speed trains have brought Marseille within four hours' travel from Paris).

The secret is partnership between government and the private sector. The state builds the infrastructure (roads, trains, harbours) and steers investment with a set of sticks (planning controls) and carrots (tax inducements). Within the loose game rules laid down by the state, the capitalist then uses his money as he pleases. But within the European Union, this mixture comes in different proportions. In Germany, the key relationship is between medium-sized firms and regional government, and everything gets done by energetic provincial consensus between businessmen and politicians who already know one another pretty well.

In France, although regional government now exists, Paris remains the centre of power and imposes its own "grand projects'' (like routes for motorways or for new TGV rail tracks) upon local authorities that lack the muscle to veto them. French planning,in consequence, is awesome at the top but practically non-existent at the bottom - at the level of the chaotic rush of speculators, industrialists and cowboy builders round the Etang de Berre.

In Britain, planning is stricter but dynamic state sponsorship scarcely exists any more. Coming back from Marseille, I was struck by the sheer archaism of British economic policy since 1979. Privatisation, far from acting as a tonic of fresh investment, is a sort of hospice to which public services are transferred when the state has given up hope of improving them. Above all, wages policy - the attitude to reward - rests on a dogma about incentives which the rest of Europe long ago consigned to the museum of early-capitalist horrors.

In France, those who employ my younger relations assume that they will work better if they are paid more, and will give better service if they have some degree of job security. But in Britain, we now rely on fear.

The other day, the conductor of a British orchestra was heard to remark: "Musicians who don't know if they'll have a job next week do play with a special brilliance!" This sort of rubbish is known as "freeing up the labour market", and the conductor's comment shows how widely these irrational ideas have contaminated society since Margaret Thatcher took office in 1979.

The Government's main economic role, in this view, is not to lead investment or create infrastructure, but to depress pay. Trade union rights have been broken down; wages councils have been abolished; the idea of a minimum wage was fought off as a "Brussels violation of British sovereignty"; collective bargains with workforces are being replaced with individual contracts. At the end of this road is a society in which only a minority of the employed population will have full-time jobs. The rest, left to organise their own social insurance if they can afford it, will be "free-lancers" - in other words, casual labourers jostling to sell their labour day by day and competing with others to push the price of that labour down to poverty levels.

Most European nations remember that sort of thing. The French certainly do. In Provence it was the rural hiring fair, when farmers selected the seasonal labourers they needed for the grape or olive harvest from the ragged crowd hoping for a few days' work.

The British remember the system, with disgust, as "the lump": mobs of men waiting in the rain outside docks or building sites for the chance of a day's pay. France will not return to scenes like that. Our own Government, in contrast, seems to hanker for them.

Perhaps there was a time when a labour force of underpaid, insecure workers was necessary for capitalist prosperity. But, if that was ever true, it was only true about large-scale capitalist farming, in pre-democratic conditions. To think such a system relevant to modern industrial and service economies, with all their skill requirements and their dependence on mass consumption, is insane.

No wonder that Britain now lags at 11th place for gross domestic product per capita in the European Union. A low-wage economy is a low-success economy. A society in which people work much longer hours than in other European countries, but bring home no more pay, is a sick society.

Even the chairman of British Steel said the other day that low wages were not the best way to stay competitive. Perhaps he learnt something from his steel-making colleagues near Marseille. Or perhaps, like me, he simply came back to Britain from abroad and choked on the smell of failure.