Reform in France has always been dramatic, but never quite like this. The nation's annual Molière theater awards went unplugged last week, after performing-arts workers protesting a cut in their unemployment scheme stormed the Paris event and convinced stage hands to walk out. The scene verged on the surreal as actors collected their awards without music, backdrops, professional lighting or even microphones.
All over France, unemployment has taken center stage. The spat over unemployment compensation in performing arts threatens to disrupt the Cannes film festival in mid-May. And two weeks ago, a Marseilles court overturned a 2002 reform that slashed jobless benefits from 30 to 23 months. The judges ruled that the move breached the contract workers entered into when they got their [an error occurred while processing this directive] jobs, and ordered that full payments be restored and each of the 35 plaintiffs get €1,000 in damages.
The Marseilles decision could unleash a legal tsunami. Around 2,000 of the 265,000 people who have had their assistance cut off have already filed similar litigation in French courts; the first verdicts in these cases are expected early May. With an additional 600,000 jobless expected to see their payments slashed over the next two years, the Marseilles precedent could carry costly consequences. Last year, the state unemployment insurance administration was in the red to the tune of €4.3 billion. The agency's plan to limit the shortfall to €1.2 billion this year under the reform is now in jeopardy. It has appealed the Marseilles ruling, but if the initial judgment is upheld, chances are high that more and more jobless will be heading to court or forcing a government climb-down through protests like that of the performing-arts workers. That would effectively neuter any hope of tackling the deficit. "A rich nation can't brazenly economize at the expense of its poorest members, as though society owes them nothing," warns Charles Hoareau, a Marseilles union official who organized the court case.
Perhaps. But the French nation won't stay as rich if it can't figure out how to reduce unemployment and its costs. The French jobless rate of 9.8% is expected to reach 9.9% by the end of the year, much higher than the anticipated 8.2% E.U. average and more than double Britain's 4.8% level. But despite the drag of 2.5 million jobless adults on the economy, neither the private nor the public sector seems capable of doing anything about it. Last month's spectacular rout of conservative politicians in regional polls was widely interpreted as an expression of anger over Prime Minister Jean-Pierre Raffarin's reform policies, which some see as downright counterproductive. "We'd all rather be working than scrambling to find a job," comments Jean-Michel Florand, one of the victorious Marseilles plaintiffs. "But it's virtually impossible if our entire day is spent trying to scrape enough together to simply survive."
It often seems the government itself is in survival mode when it comes to controlling spending. Though Raffarin and his conservative partners swept into office on a reformist platform in 2002, they've become caught in the pincers of economic stagnation and growing public dissatisfaction. Efforts to nurture growth and job creation by cutting taxes and employee payroll charges and tightening pension schemes have done little more than further bloat France's budget deficit well beyond the 3% of gdp limit imposed by euro membership.
Even the effectiveness of earlier attempts to attack unemployment remains a hot topic. Earlier this month conservative parliamentarians issued a scathing report denouncing the nation's 35-hour workweek, introduced in 2000 by the Socialist government and designed in part to encourage hiring. The study countered contentions that the scheme had created 350,000 jobs and new tax revenues with claims it had produced virtually no new posts and had cost taxpayers €15 billion in subsidies. The findings were widely seen as politically partisan. Still bruised from the polls, Raffarin swiftly reassured the public that no 35-hour reform was imminent.
That doesn't surprise many French business owners. "The ability to adapt [the] workforce to peak and slack periods was good, but I knew when I applied the 35-hour week that I wouldn't make new hires," says Patrick Roos, who employs 38 at his custom-made shutter company in Burgundy. Though he says he'd love to see more flexible rules, Roos predicts that reform of the 35-hour week is unlikely: "It's now considered an entitlement." That's just how most French regard the social protections that the Marseilles court backed and the arts workers want restored. The question now is whether Raffarin can convince voters he wants to rationalize, not pulverize, those protections.