France: Economy, politics and Juppé
Maxime Durand explains how the implementation of a classic neo-liberal project combined with a very specific political situation to produce the events of November and December 1995.
FRANÇOIS MITTERAND'S RE-ELECTION AS President in 1988 marked the beginning of a five year period when the governing Socialist Party (PS) had a parliamentary majority. The economic upturn of 19881990 led social democratic leaders to think that they had a new space for manoeuvre, which would enable them to add a human veneer to the neo-liberal adjustment programme to which they were committed. New jobs were being unemployment was no longer rising. For several months, the socialist government did not have to think about any other measures, like, for instance, adjusting working time. But the end of the upturn in 1991 created much harder conditions. The Rocard government chose to follow the orientation of the European Commission (presided by the French Socialist Jacques Delors). They adopted a stricter version of neo-liberalism, as set out in the Maastricht Treaty. The Socialist Party threw all its weight into assuring the narrow victory of the "Yes" vote in the September 1992 referendum on the Maastricht Treaty.
The terrible balance sheet of this incoherent policy led, naturally enough, to the Socialists' failure in the 1993 elections. François Mitterand now "cohabited' with a conservative Prime Minister, Edouard Balladur. The new government adopted classic, though relatively cautious, neoliberal policies. Balladur proposed, but under pressure from the youth movement withdrew plans to reduce the minimum wage by 20% for those under 25. But he did begin a chain of privatisations, and seriously weakened the pension system of private sector workers. His "reforms" increased the number of years workers must contribute before receiving a full state pension from 37.5 to 40. Pensions were no longer calculated on the basis of a worker's ten highest-earning years, but the top 25. Balladur reduced social security payments for employers, and made it easier to discriminate against women workers by increasing subsidies for part time employment. In each of these policies, Balladur could claim to be continuing in the direction set by the Socialist Rocard. CHIRAC 'S CONTRADICTIONS
Six months before the 1995 presidential elections, Balladur seemed certain to take the country's highest office. His neo-liberal measures had slowly eaten into his popularity, but the left opposition was unable to benefit from this, since it had no credible alternative programme, and was associated in people's minds with a similar neo-liberal policy to that of the rightist parties. The Socialists' only innovation was their verbal support for a reduction in labour time.
When Jacques Delors, the former head of the European Commission, presented himself, Balladur was in trouble. But the most popular Socialist Candidate withdrew, presumably when he realised the contradiction his party was in.
It was in this context that the conservative Mayor of Paris Jacques Chirac presented himself, leading a demagogic campaign on the theme of struggle against the "social fracture" in French society. Some right wing voters were attracted by the chance for an "alternative" policy within the conservative camp. And some left wing voters found Chirac's messages more convincing than those of the Socialist Party. Chirac beat Balladur into third place in the first round of the presidential elections in June 1995, and beat the Socialist Party candidate Leonel Jospin in the second round.
Chirac's new government faced one major problem: in reality, they had no "alternative" policies to offer. All they could do was return, as quickly as decently possible, to the neo-liberal positions Chirac had distanced himself from in his speeches. All that remained to be done was to avoid making this look like a complete about-turn. Prime Minister Alain Juppé allowed himselt the 'treat' of raising the minimum wage, but, almost immediately afterwards, he was obliged to raise Value Added Tax (a sales tax) by two percentage points.
Things were getting very confused. Ultraliberal Finance Minister Alain Madelin, a man who would find it difficult to give even lip-service to an "alternative" policy, was removed from his post. Propositions for the state budget mixed attacks on the working class with marginal compensation measures. Modest as they were, these proposals were not to the liking of "the markets". Nevertheless, the general tone of the budget can be judged from one of its principle measures, a freeze on civil servants' wages. Or, in other words, a reduction of their buying power. This attack provoked a day of action on 10 October 1995. One could already sense a growing feeling of general refusal of the government's policies. The protest by civil servants was supported by a majority of the population (according to the opinion polls), despite government attempts to present them as over-privileged. THE JUPPÉ PLAN
This set-back for the government led Juppé to choose a strategy of counter-attack. He proposed a plan for social security reform. This "Juppé plan" was a fairly subtle mixture of measures aimed at reducing the deficit of the Social Security system, and "reforming" the social protection system as a whole. The short term goal was to finance the deficit through an exceptional 0.5% tax on all revenue. Juppé called this an egalitarian "solidarity' tax. But 77% of the revenue taxed was wage income. And the plan called for a 0.5% tax on child benefit, old age and invalidity pensions, and unemployment benefit.
The Juppé plan also proposed a ceiling on the yearly increase in health spending, and a rather symbolic tax on the pharmaceutical industry. His health propositions also included clearly discriminatory measures, like the 27% increase in the hospital forfait (non-refundable contribution towards hospital treatment).
Juppé also proposed that the management of social security be put under the control of parliament. This would require amendments to the constitution, and is probably the most significant aspect of the plan, in the medium term.
But none of these were the element which sparked such massive opposition to the Juppé plan. That honour goes to the
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* France
Minister's propositions standardising the pension system in the public sector, and his proposed cuts in the SNCF (national railway company). The strike started among railway workers following a day of action on 24 November, quickly spreading to the RATP (Paris public transport utility), the Post Office, France Télécom, and the electricity utility Électricité
Many commentators criticised Juppé for is the only real criticism the Socialist Party has put forward. Bad timing and Arthuis even managed to mobilisation, the abolition of tax relief on 20% of salary.
But the reality is that the government had so many measures they wanted to introduce that they were very short of time Particularly given the rigorous convergence criteria of the Maastricht Treaty. The government's inability to spread these measures out made some risk of confrontation inevitable.
But such a strong social movement can't be explained without also looking at the shift in the ideological balance of forces. Until these events, neo-liberalism had been gaining ground. Neo-liberal policies more significant than the Juppé plan had been implemented. People had accepted that the norm for salary growth is "inflation only". In other words, zero growth in buying power, despite continual increases in productivity. But now, the government was attacking health and social security, the two pillars of the welfare state. In both cases the plan is to make profitable, to privatise and to reduce to a minimum anything which could be considered to be an indirect salary benefit. This is a systematic attack, based on a neoliberal programme which, generally speaking, is accepted in society. But this acceptance is starting to change.
The idea that adjustment (not a neutral word) corresponded to a transitional phase of adaptation, mutation, and transformation which it is beyond our power to control is starting to dissipate. To begin with, people are starting to realise that this is an endless "phase", and that every victory of neoliberalism leads not to a new relative status quo, but to a new attack in a different field.
Second, people can see that it doesn't work. Like Chirac himself, neo-liberalism doesn't keep its promises. Several of the key theorems of the model have been invalidated. Not by theoretical means, but on the basis of a widespread practical 12 International Viewpoint February 1996 experiment with neo-liberalism, over the last decade.
• the neo-liberals claim that wage austerity leads to a durable upturn in the economy. But we have frozen salaries, and investment has not risen in a durable way. On the contrary, it is financial revenues which benefit from the falling proportion of the surplus which goes to wages.
• They also claim that reducing social overheads for employers and increasing labour vulnerability (they call it 'flexibility') will lead to "growth with more job creation" But unemployment is not falling significantly. The only result of "flexibility has been to de-stabilise the conditions of wage labour a little more than before.
Neo-liberalism is loosing its legitimacy. Because its discourse of "necessary modernisation" appears to be increasingly out of step with reality as people experience it. People can't see what is so modern about wage freezes, rationing of social services, increased labour vulnerability and greater marginalisation. The big question which is emerging, and to which the dominant economic ideology does not have a real answer, is as follows: why is it that a country which is becoming richer and richer should be characterised by what we can only call a process of pauperisation? French GDP [the total value of goods and services produced] increased by 50% between 1974 and 1994. But how many people in France can say that their standard of living is 50% higher than it was 20 years ago? The mystery is easy to solve. Twenty years of neo-liberalism have allowed an incredible deepening of social inequality. From this point of view, capitalism is returning to the way it worked 100 years ago. This is what people are beginning to see. And the great discourse of modernisation is slowly emptying of any content. SOCIAL SECURITY BLUFF
Such feelings are particularly justified, given that the urgent need for social security reform which the government proclaims is the result of the negative effects of neoliberalism, in the form of the very severe recession of the early 1980s. As one respectable study argues, "if the French economy had grown modestly between 1990 and 1995(2.3% per annum rather than only 1.5%) then the 1995 deficit would be 1.1% of GDP, rather than 5.3%. The various parts of the social security system would not be in deficit... The deficits we face now are, therefore, entirely the result of the recession of 1991-93. [As a result,] the measures which are being considered have more to do with counteracting the effects of that recession than with reforming a system which is somehow structurally in deficit."1
Most of the dramatics about the structural crisis and the need for reforms is a bluff.
"Runaway" health costs also reveal a complex reality. It is true that there is a general problem of over-consumption. But pharmaceutical industry's policies. These companies make one false "innovation" after half-drown doctors "informative' publicity, and lobby against the use of generic' medicines which bring them
The government's plans have one central claim: health spending is rising faster than GDP, which means that we French are "living beyond our means. But this argument is groundless. Why shouldn't health spending represent a growing proportion of total spending, if the increase corresponds to an evolution in social needs? If the social security system did not reimburse health care, people would simply be spending a growing part of their incomes on private health care.
In any case, the argument is thin. The relative growth in health spending is not so alarming in reality. It is true that the population is growing nevertheless, the rate of growth in health spending is slowing down. By 2002 health spending will probably not be rising any faster than GDP.
The real problem, for the neo-liberal logic, is of course the way which our specific need for health care is satisfied in countries like France: through a socialised salary. Our need for health care creates a non-market mechanism which leads to the provision of funds for socialised health care. The neoliberals say they want to control health spending. But in essence, what they want to control is our global salary. A new form of
The social debate becomes clearer as the current wave of struggle continues. The movement in November and December expressed the aspiration of a society which has different priorities and criteria for the redistribution of society's riches. A new project for social transformation is germinating. This project is being defined through analysis and discussion of those rights which it should be a priority to ensure: full employment, health care, housing, and so on. Neo-liberalism no longer has a perspective to offer. Its mask has fallen. Behind all the talk of modernisation, workers in struggle have recognised the crafty. obsessive protection of extremely narrow class interests. The other side wants to preserve its interests, whatever the cost. Even if it means social regression, taking us back to the 19th century. * Note 1. See this author's "La grande arnaque" in. Rouge weekly, 23 November 1995.