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France affords free services { April 22 2002 }

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April 22, 2002/Vol. 159 No. 16
The Fight for Quality of Life
How long can the French continue to afford their excellent — and expensive — public services?

Imagine that France was a developing country. What would the International Monetary Fund tell it to do? The state is France's biggest employer, directly providing nearly 25% of all jobs and indirectly supporting a further 15% — the IMF would certainly not approve. It would point out that by shrinking the public sector, the French could cure their spendthrift ways. (Last year public spending represented 51.4% of GDP.) The IMF would argue that by privatizing many services now assured by the state — from health care to transport to pensions — French wage earners would be left not only with more money in their pockets, but also with cheaper, more efficient services. And finally, the IMF would scold, lose that 35-hour week and get yourself a real work ethic.

Back on planet France, however, that wake-up-and-smell-the-austerity message is hardly being aired. France's big government is not only alive and well, it's getting bigger and more expensive all the time — and the French like it that way. From 1997-2001, the budget of France's civil service rose by 11.5% — or 111 billion — and is set to expand another 3.7% (worth 14.2 billion) this year, partly to recruit nearly 16,000 new public employees. According to economist Jacques Marseille, whose book The Great Waste details France's profligate ways, ill-conceived public spending has made the nation a notorious exception to the European trend toward shrinking government. While French public spending in 1990 represented 49.5% of GDP versus a European average of 47.4%, he writes, in 2000 France's ratio rose to 51.4% of GDP, while the E.U. level dropped to 44.2%.

The French fear that trimming back the state would undermine the nation's vaunted public services, the very things that guarantee the country's quality of life. "There is a certain cultural attitude in France that considers work, money, success and business important only in as much as they contribute to more important things like family, personal happiness and quality of life," explains Robert Rochefort, director of the Center of Research for the Study and Observation of the Conditions of Life in Paris. "That produces resistance to reform, especially when it comes to public services."

Just what creates that unique French quality of life, feeding the nation's joie de vivre? Part of it, Rochefort says, is "gifts from the gods we did nothing to earn, but which we fully appreciate" — as do the 76.5 million tourists who visit France each year, making it the world's leading holiday destination. Within a relatively small area, France contains a stunning diversity of geography, climate and agriculture. The French show their gratitude for such blessings by taking time to enjoy them. Fast-food culture is advancing, but the French still prefer to sit down to a carefully prepared, multi-course meal. Most French cities still close down entire streets or neighborhoods several mornings per week to hold farmers' markets. The French like to travel, and do so often thanks to generous vacation rights and frequent holidays, as well as subsidized public transport. And many municipalities shut off central thoroughfares on weekends and holidays to create "instant open space" for cyclists and rollerbladers.

True, such efforts have not prevented increasing numbers of French families and businesses from bolting the urban centers for the less cluttered spaces of the French west, southwest and Mediterranean coast. But there too the state is at work to ease the transition (see box). "Economic, infrastructure, and business development were orchestrated nationally to prevent certain regions from being overlooked," Rochefort notes. "Because of that, people and businesses know they can improve their quality of life by moving to provincial areas, yet find the same variety and quality of services. Today, you can choose where you want to live, rather than where you're able to work."

And the state makes sure that French citizens have that freedom of choice. Whether it's free education, generously subsidized daycare, a universal health system ranking among the world's best or family allowances open to nearly anyone, the French take pride in public services that spring from a centrally organized, collectively financed system of solidarité. "French public services reflect a social ideal of all-for-one that conservatives and leftists alike call their own," says Manuel Valls, Socialist mayor of the Paris suburb Evry. "They're far from perfect, but they're there for everyone."

The same kind of collective give-and-take was behind France's 35-hour workweek, a popular measure designed to provide existing employees more time for what many French consider their "real" lives — i.e. free time — but also to create nearly 250,000 new jobs so far. Though initially denounced by business owners, the reduction, some studies indicate, has made labor markets more flexible. Despite working less, France continues to draw the Continent's highest level of foreign direct investment. The French stay competitive through lower salaries that help compensate for higher corporate taxes and employee-related social charges. And French productivity-per-hour rates surpass those of both the U.S. and the U.K. But the French devotion to solidarité may not be tenable in the long term. The state-owned rail company SNCF, for example, lost money in three of the last four years while offering an excellent, affordable service on little-used lines as well as high-speed TGV routes. Similarly, state financing of the extra leisure time and added jobs attributed to the reduced workweek cost an estimated 110.8 billion of state financing in 2000 and 115.2 billion last year — a figure representing a third of all income taxes collected. To many, the solution to France's public spending binge lies in demographic change. Over the next 10 years, millions of baby boomers — and over 800,000 of the 5.5 million public-sector employees — will retire. Conservative presidential candidate Jacques Chirac has called the aging curve "a golden opportunity" to reduce the state sector painlessly — but will either he or his political rivals actually seize it? Highly unionized civil servants wanting to safeguard their jobs and pass them to future generations not only noisily strike, they also vote. So, too, does the service-loving French public that appears convinced that size does matter. "Reducing the global number of public-sector workers is not only a priority in itself," says former Socialist Finance Minister and potential Prime Minister Dominique Strauss-Kahn. "Our goal is to cut waste, increase efficiency and quality of services provided, and to deploy new hires on hospital staffs, police forces and teaching positions where they're needed." Even if the state does downsize, acknowledges Jacques Bille, a liberal-leaning business leader, the nation's fondness for its public services means "France will always have a larger state administration and higher taxes." Of course, good public services depend on good economic growth. But given the recent downturn, any future government would be unwise to count on tomorrow's growth to pay for today's expenditures. In the end, simple mathematics could force the French to accept a smaller state that provides only what it can afford, and to contain their joie de vivre within more narrow means.

©TIME. Printed on Monday, August 25, 2003

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