One Year with Pay

The governments of all Western industrial nations face a socioeconomic dilemma: in order to fight inflation and the social disruption that it causes they must restrain demand--and risk triggering a recession that would stir even more social unrest. Last week France went further than any other nation has gone to defuse that danger. At the urging of President Valery Giscard d'Estaing, the Patronat, or federation of French employers, agreed with the country's five major unions on a new plan that in effect will guarantee a full year's pay to any French worker laid off for reasons beyond a company's control.

Under the scheme, Labor Minister Michel Durafour indicates, the government will grant $220 million to set up an emergency fund. The fund will be supported by contributions financed 80% by employers and 20% by workers through higher payroll deductions. Any worker discharged because of economic force majeure can collect from the fund 90% of gross wages for a full twelve months, roughly equivalent to the take-home pay he or she would have received on the job. Government inspectors supposedly will make sure that the layoffs truly result from recession, and not from bad management by the company or poor performance by the worker.

The plan reflects Giscard's fear that rising French unemployment (estimated last month at 2.3% of the labor force) could lead to violence reminiscent of May 1968, when France was paralyzed for weeks by student strife and workers' strikes. The potential for trouble is again running high, with French inflation galloping at a rate of 14.5% a year.

Premier Jacques Chirac said the new program "has no precedent. No country in the world can boast it." That appears to be true. In the U.S., for example, unemployed workers generally are entitled to draw benefits for 26 to 39 weeks. President Ford has proposed extending them for another 13 weeks, making them last up to a full year as in France, but the compensation usually comes nowhere near equaling full take-home pay. The French plan will be expensive, but even employers do not yet dare grumble. Historically, France has trailed far behind other European nations, notably Sweden, West Germany and Britain, in granting social benefits to workers. For the moment, at least, everyone seems pleased that for once France has taken the lead.

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