Attack on the value of labour
De-regulation and privatisation are a reaction of governments to the new needs of capital. What differs from one country to another is the political and social form of the implementation of this mutation. Claude
Gabriel explains how French peculiarities combined to transform a "normal" protest over the government's plan for the reform of social security into a mass social movement, unprecedented since 1968.
Most French "experts" absorbed and regurgitated government propa-ganda IUS: EN about the need for these "just" reforms, in order "to prepare the future" by "reabsorbing certain privileges". But the claimed rationality of these reforms evaporates as soon as you being to analyse them. Which is hardly surprising. Because the real rationality is elsewhere. The needs of capital, and the political and economic requirements of the Maastricht treaty for European integration, are accelerating a number of processes which have been underway for a number of years. French employers have been arguing for years that the social charges they must add to the wages they pay out are too high. In effect, they are trying to force down not just the direct cost of labour, but also its indirect cost. For social security in a country like France represents the socialisation of certain needs of the working population. THE MAIN REASONS BEHIND THE deficits of many social programmes are this devaluation of labour, coupled with the high level of unemployment. This is because social security payments are largely financed by taxes on wages. Less workers means less income for the social security system, as well as Average annual growth in wages, productivity and GDP (%)
1987-90 1990-93 1993-95 GDP 4.0 0.3 3.1 Wages 1.3 0.8 0.1 Productivity 2.7 0.8 2.2. Source: OECD 10 International Viewpoint nº273 more claimants of unemployment and low income-related benefits.
The way the government approaches the problem of public debt reveals very clearly the class nature of the system we live in. A "right" has suddenly become a "privilege" Abolishing this "privilege" is only a measure for reducing the running costs of the state. This is the message from the bourgeoisie, relayed by all the well-off and privileged opinion-makers. A BIT OF HISTORY
In the old days, salaries used to rise as productivity rose. Sooner or later (depending on the struggle) prices too would rise. This is no longer the case in France, and in a number of European countries. Since the 1981-2 recession, salaries have been deconected from productivity gains. Inflation has been consistently low, which means that productivity gains have mainly increased company profits. There has been only a marginal contribution to labour, in the form of wage increases.
This tendency has persisted, both in periods of economic growth and during recessions (see table one). During the upturn of 1987-1990, salaries grew slower than productivity and GDP. In the recession of 19901993, salaries, productivity and GDP grew at the same rate. Since then, productivity and GDP have again risen much faster than wages. Indeed, the rate of growth of wages is even lower than in 1987-90.
This structural change in the creation of wages is common to a number of European economies. But it is particularly marked in France, thanks to years of Socialist Party government, during which there was little if any resistance from the workers.
DEVALUATION OF LABOUR
This new mechanism has slowly spread through the various sectors of the economy. Only a minority of professions and categories of workers are exceptions. Whole levels of qualification are being progressively devalued in a process of industrial restructuring which draws on a "reserve" labour force, created as a result of persistent unemployment in all professional categories. The final result is, of course, that the value of labour power as such is being pulled down.
The structure of the labour market is changing too. New kinds of contracts are exploding the concept of minimum wage. For this is what the growth in part-time work represents. The French government even sought to speed the process in 1993, by proposing to set a special minimum wage for young people, lower than the previous universal minimum, now reserved for adults only. New public services, particularly those of a social nature, and those controlled by local and regional governments, are increasingly carried out by subcontracted labour earning less than the minimum wage. These are not special training schemes or makework programmes. These are necessary jobs, being carried out at a new, lower price. PRESSURE OF UNEMPLOYMENT
The logical consequence is that the whole idea of labour contract is being unravelled. Why not consider each employee as a mini-company, proposing a service on the marketplace? Why not break through what is now called the "straitjacket" of labour contracts? In 1994, Minister for Enterprise Alain Madelin argued that "we will not go back to full, salaried employment. But we will create new forms of work, and liberate initiative... replacing the traditional salary contract with a commercial contract
*
France rédération syndicale
Unitaire
SANTE,
POUR
FAMILLE,
LA DEFENS
RETRAITES,
CODE and an individual entrepreneur" (Les Echos, 6 September 1994).
Watch out! Because this is what governments and employers mean when they start talking about "reducing the working week" in order to "avoid job-loss" and "save jobs". Over the years, amendments to regulations and collective agreements have increased the flexibility of labour. Workers are increasingly contacted for a period of work defined in a yearly or monthly, rather than a daily bloc. This makes it easier for the bosses to manage their labour resources, in eliminating "surplus labour costs" This all means increases in productivity. And reducing the value of labour, in the name of saving jobs.
In 1980, salaries represented more than 70% of the value-added of enterprises. Today, the figure is 61%. This is less than the average of the European Union, and the OECD countries. Over the last 12 years, the share of wages in value-added has fallen by seven percentage points. The share of profits has risen by the same amount. TRANSFERS TO COMPANIES FROM WAGE-EARNERS AND THE STATE
You can see how difficult it has become to maintain a high level of social protection when such protection is financed from the labour bill, in a period when labour is being devalued. The relative decline in salaries as a percentage of GDP is having serious consequences on state revenue. The number of jobs increased
ASU slightly in 1994. But because these were mainly part time and precarious jobs, there was virtually no increase in the revenue of the social security system. Which is what the government was counting on.
In other words, the devaluation of labour has direct consequences on the budgets of social programmes, and the total revenue of the state. The outrage of the Juppe plan is that it would require the same people who's labour has been devalued to cough up for the resulting shortfall in state revenue. The public sector deficit
The state has to save money. The press obediently lectures us that, in the end, all these wasteful state programmes are financed by the taxpayers. So everyone should benefit from reforms. The message is that the state's lifestyle is too extravagant, mainly because of an excessive mass of civil servants.
The opposite is true. In France, increases in the public sector deficit have gone hand in hand with economic growth. The deficit was about 2% of GDP until 1990. But the subsequent upturn in the economy was accompanied by a worsening deficit. The state was faced with stagnant sources of income, and increased expenditure on aid to companies (to help them reduce unemployment!). Increased rates of interest had also increased the service charges for the debt. The running costs of the state caused only a small part of this increase (22% of GDP in 1987, 21.9% in 1994). Civil servants' salaries represented 22.3% of GDP in 1987, and only 22.4% in 1994. So it is clear that the public sector deficit is not caused by a "bloated" civil service, nor by an "explosion" in social security and other spending.
The media neglect a number of interesting statistics.
• Tax on company profits fell by 37 billion francs between 1990 and
1994. And this despite a 50 bn FFR increase in profits in the same period!
• The loss of workers' and employers' social security contributions as a result of persistent, high unemployment has cost an estimated 100 bn FFR over the last five years.
• Two thirds of this year's deficit is made up of interest and service charges paid - at free-market rates
- on state debt.
• no-one seems to have noticed one
"non-productive, privileged"
group - the military. Nor is the government proposing to cut the nuclear weapons programme. The latest budget maintains all existing military projects at their current spending levels.
The "need" to increase the number of years contributions needed for access to old age pension is justified by reference to conditions in the private sector. But the higher limit was only imposed in the private sector two years ago. This is why the determination of public sector workers to defend their own pensions has quickly taken the form of the wider defence of the pension and social security rights of all categories of workers.
January 1996 11
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