Posted Sunday, June 1, 2003; 14.38BST
Arcelor, Europe's largest steel company, may provide a glimpse into Europe's workplace future. The Luxembourg-based firm, which has €26.6 billion in revenues and employs 104,000 workers, has managed to extend the retirement age without destroying the system. For 15 years, starting in the mid-1970s, everyone over 50 at its French operations — then a stand-alone company called Usinor — took early retirement. It was part of a government-subsidized restructuring program for the steel industry, and a boon to 100,000 workers, who retired early on 92% of their salary. But when the government stopped the subsidies in 1990 after protests from rival steel firms and other French industries, Usinor had to scramble to figure out what to do with its older workers. The answer, says Daniel Atlan, human-resources manager, was a program to push the retirement age out to 60, and upgrade skills. The jobs of everyone over 50 were guaranteed, and thousands were retrained to use computerized equipment. People under 50 were told they would only be laid off if other work could be found for them: the firm created an employment agency to help. "Most of the people we hired in the '70s we hired for their muscles, not their brains," Atlan says. "But we told them: 'If you improve your skills, we'll improve wages.' It was a big bet: we'd pay more, but we'd improve our performance." The bet paid off, Usinor was privatized and merged with Luxembourg and Spanish steel firms to become Arcelor. Overall productivity doubled in the 1990s and Atlan estimates that about half of the increase was due to the improved skills of the steelworkers. But weaning the workforce off early retirement hasn't been easy, and many older steelworkers ended up working part time. "People still want to leave early," Atlan says. "We haven't changed the mindset."

Back in Ris-Orangis, too, people are having a hard time adjusting. Like many towns outside Paris, it grew at a solid clip in the 1990s. But starting in 2001, the economy sagged. Bigger firms in the area, including telecommunications giant Alcatel, began layoffs. The hardest blow came when Danone shut its LU cookie factory on the edge of town. The 290 ex-employees still looking for jobs have an average age of 48. "It's not going well," says Farid Djitli, a union representative. Only one person has found work at the same pay; 40 others took a 30% pay cut. They are being cushioned by Danone: as part of the severance package, it's making up for the shortfall in pay for three years. Even so, says Jean-René Buisson, the firm's general secretary, "it's difficult to convince people to take lower-paying jobs." Who can blame them? No one wants to believe the good times are gone. But doing so may be the key to getting them back.

Previous | 1 | 2 | 3 | 4

	New Europe, Old Economy [Jun. 2, 2003 ] Poland is America's new best friend. But the country is also in deep distress The Plan That Fell To Earth [May 5, 2003] Giscard unfurls a new E.U. blueprint, and the smaller states see red A Week in Hell [Mar. 24, 2003] At the precipice of war, facing mutiny at home, Tony Blair stays cool What If They Say No? [Dec. 16, 2002] Thought European Union enlargement was a done deal? Not yet. Search all issues of TIME Magazine