Steel, Surgery and Survival

The Premier's "new revolution "provokes an outcry

Raymond Barre made the rashest of vows when President Valery Giscard d'Estaing appointed him Premier of France in August 1976. He promised to cure the country's inflation-racked economy in three years. As that deadline approaches, the roly-poly former economics professor has become the target of increasingly heavy fire from trade unions, the leftist opposition and even the largest party in his own coalition, the Gaullists. Last week, at the insistence of Gaullist Leader Jacques Chirac, the French parliament was called into emergency session for the first time since World War II. Although Barre has succeeded in stabilizing the franc by turning France's trade deficit into a surplus, he has been unable to lower inflation, currently 10.2% annually. Moreover, his policies led to a one-third increase in unemployment, which last month reached a new high of 1,284,800, or 5.8% of the work force.

Unemployment is not a new problem for France (see chart), but it has become a burning political issue. The spark was Barre's announcement last December that 21,000 workers in the government controlled steel industry would be laid off over the next two years. The news provoked fury in the two regions most affected: the north, around Lille, and Lorraine. Strikes and demonstrations have become regular occurrences, punctuated by occasional outbursts of violence. Highways have been blocked, and government officials have been locked up in their offices by angry steel workers. In the ugliest incident so far, seven riot policemen were wounded by rifle fire two weeks ago as they tried to control a rock-hurling mob in the town of Denain.

Barre's steel measures are part of what has been dubbed "the new French revolution." That is the Premier's attempt to reduce the government's traditionally massive interference in the country's economic affairs. Though railways, utilities and many industries have long been nationalized, Barre is insisting that state-owned companies turn a profit. His model: West Germany's free-enterprise-oriented economy. Barre's government has already dismantled an archaic system of price controls that contributed to inflation because it eliminated incentives to lower prices in a competitive market. Now the Premier wants to curb the flow of public funds into deficit-ridden industries, and he has urged managers to streamline their operations by laying off workers if necessary.

Steel has been the key money-losing sector. French steel companies, which have been kept going by uneconomic government subsidies, were not prepared for the crisis that resulted from a worldwide decline in demand, accompanied by aggressive competition from Japan and the Third World. While a French worker takes 11.2 hours to produce a ton of steel, the same job is done in Germany in 7.9 hours and in Japan in 5.9 hours. That is partly because French plants have antiquated machinery requiring greater manpower. A more productive steel industry, the Premier argues, "is a matter of survival for France."

Although surgery was clearly called for, Barre's professorial temperament, combined with France's traditionally poor labor relations, has complicated the task. The West German steel industry had relatively little trouble gradually eliminating 100,000 jobs over the past 15 years because labor unions were consulted all along the way. But Barre's reforms were put forward as nonnegotiable, and he has refused to respond to union outcries. To be sure, the government has offered a variety of benefits to ease the pain: retraining programs, retirement at age 55, and severance pay of $11,700 for workers who quit voluntarily. The government has also tried to attract new industries to the areas where layoffs have been most severe.

Barre's attempts to follow the West German example have provoked an alarming resurgence of anti-German rhetoric. Michel Debre, who served as De Gaulle's Premier from 1959 to 1962, blamed France's economic troubles on the European Community, which is "too easily manipulated by our German competitors -I say competitors, not partners." The Communists have been even more demagogic. "What the Germans couldn't get in 1914 and 1939 they are conquering today," complained Jean Gillet, a member of the Communist-dominated CGT union. *

Despite growing political opposition, the Premier is in no immediate danger of losing his job. Chirac, who had convened the emergency parliamentary session in order to embarrass Giscard, was quickly outmaneuvered last week. When the Socialists and Communists called for a no-confidence motion against the coalition government, Chirac was reluctantly forced to support Barre. The leftists, whose family quarrels contributed heavily to their defeat in last year's elections, are still divided. The Communist and Socialist parties could not agree even on the wording of a no-confidence motion, with the result that the two parties produced their own motions.

Nonetheless, the French people show little confidence in Barre. The Premier got a 36% approval rating in a poll last week, a drop of 9% in the past year. Clearly, Barre's tough economic remedies will have to be carried out with more sensitivity and imagination if he is to avoid fulfilling a prophecy by Communist Leader Georges Marchais: The people, if not the parliament, will one day reject Barre's policies. --

* The public disagrees. According to a poll published by the newsmagazine L'Express, 33% of Frenchmen consider West Germany their "best friend." The U.S. is in second place with 22%, followed by Belgium (20%) and Britain (16%).

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