Precarious nature of job security arouses new fear

AS any publisher will tell you, books on economics are a hard sell. So it was surprising that a 216 page essay by French writer Viviane Forrester, L'Horreur Economique, sold 154,000 copies and won a literary prize in France this winter.

Forrester's apocalyptic vision is based on one simple observation: French society produces more and more, but with less labour. The worker has become futile, useless, irrelevant. The economy is a machine that enriches the rich and humiliates, excludes and impoverishes the poor.

The "horror" referred to in Forrester's title is the precariousness of every French job, the secret fear of every employee that he, too, will be fired.

The profound pessimism of L'Horreur Economique struck a cord among the public because it provided a simple, easy to understand explanation for France's 12.7 per cent - and still rising - unemployment rate. Forrester has received hundreds of readers' letters and a school of pop economics has sprung up around her theories.

According to Forrester, economists and politicians have understood for a long time that work was doomed to disappear, but this reality was masked by the portrayal of the crisis as a passing phase.

Perhaps the only thing about which those arrogant economists agree is that unemployment - and the stagnant growth which feeds it - is a canker at the heart of the French economy. Along with the inefficient social security system, unemployment benefits account for a high percentage of France's projected £34,315 billion 1997 budget deficit.

Virtually all large companies in France are downsizing: the automobile manufacturer Renault has shed 40 per cent of its employees in the past 12 years. The big banks and insurance companies are expected to do the same, and the privatisation of large government owned companies like France Telecom, Air France and the SNCF railroad is a time bomb which could put hundreds of thousands more Frenchmen on the dole.

In 1994, the Balladur government tried to introduce the contrat d'insertion professionnelle (CIP), which would have enabled companies to employ school leavers at cut rate salaries. The project was abandoned after student protests. This month, the French management federation, CNPF, proposed an almost identical plan, renamed stages diplomants or "diploma internships". President Jacques Chirac immediately approved the idea, but the trade unions denounced it as a repeat of the CIP and a threat to workers' rights. The government quickly back tracked, saying nothing would be done without first negotiating with student groups.

Other efforts have focused on lowering the charges sociales. Over and above each employee's salary, French employers pay an extra 45 per cent monthly to cover social security, retirement, unemployment and medical insurance.

The employee sees 15 per cent of his salary deducted at the source for the same purpose. These heavy welfare taxes, along with restrictions on firing, are the greatest disincentive to job creation in France.

The average annual cost of employing an unskilled labourer in France is $20,000, compared to $10,000 in the US, Mr Jean Claude Trichet, the governor of the Banque de France, France's central bank, told The Irish Times.

The government has reduced social charges on the £771 minimum wage by £139.75 per month, a reduction which it financed by increasing VAT from 18.6 per cent to 20.6 per cent The move has not produced substantial results, partly because most employers need experienced workers from higher wage brackets. The government is also trying to encourage part time work, something alien to the French.

In the meantime, officials like the central bank governor Mr Trichet, are searching for the elusive formula that will allow the French to have their brioche and eat it. "We cannot introduce the US system - which would halve labour costs - in France," Mr Trichet said.

"It would be absolutely unacceptable for all French people. The solution to our problem is flexibility in a more active labour market. Some countries have proven they can have low unemployment without dismantling social protection. "Denmark and the Netherlands offer examples of countries like us who are keen on equality and protection.... Unemployment could diminish considerably if you, have the right structural reforms.