July 15, 2014 | by Emmanuel Martin Print

In France the frequency of strikes has gone down during the last generation. But the country is still prone to social conflict -- as the latest strikes demonstrate -- and if the necessary reforms are implemented, more are to be expected.

A few days ago the opening of the international festival of Avignon -- one of France’s most famous cultural events -- was cancelled because temporary show-business workers are on strike against changes in their generous unemployment-benefit system.

Ferry connections between the big southern city of Marseille and the island of Corsica, a highly popular tourist destination, were stopped for two weeks by striking dockers, who reject the restructuring of their company, SNCM, a largely public entity that enjoys a monopoly at the city port. The strike has not only stifled the economy of Corsica but also of Marseille – because boats would not stop at its port for fear of blockade.

Three weeks ago railroad workers were on strike, fearing that the upcoming opening to competition will disrupt what the French call their “social advantages.” So the workers prevented French citizens and tourists from using the trains, creating a nightmare in some cities. The national railroad company (SNCF) president, Guillaume Pepy, said the first nine days of the strike cost the company more than €150 millions -- one-third of its 2013 profit.

The air traffic controllers joined in too during the first week of holidays and the busiest weekend of the year.

Why so many strikes?

Social and labor relations are heavily regulated by the centralized welfare state in France. We know welfare states create conflict between negative individual rights and positive welfare “rights,” and between present and future generations. But the French type of welfare state has caused an even more complex “class warfare” as the government – like a monarchy – has the ability to grant “privileges” to favored professional associations on the basis of their ability to lobby and threaten strikes – or to withhold votes.

The consequence is to make France’s so-called “solidarity” system unequal -- that is, some are “more equal than others.” The tragedy of the commons associated with welfare states -- the treatment individuals’ wealth as a collective resource for anyone to grab -- is here amplified by the fact that various special-interest groups have differential access to other people’s money. In this race for “mutual plunder,” as the 19th-century French economist Frederic Bastiat used to say, the object is to get the favors of the sovereign and shout that one deserves more – always, of course, for the sake of the public interest.

Take the temporary show-business workers, for example. They often work the minimum hours required to claim unemployment benefits, and their contributions amount to only one-fifth of benefits paid. The gap is financed by other people’s money. Again, this is in the guise of “solidarity,” or the need to “preserve culture.”

A broader example is that of the unions themselves. Although they have a say in many policies as official “social partners,” their level of representation is only about 8 percent of the labor force! (Their primary task of negotiating wages is largely undermined by the fact that the government sets the national minimum wage). Because they have so few members, unions need to rely on taxpayers’ money for their funding, and most union positions are not paid for by members’ own money but by private or public employers. Their incentives work against accountability, transparency, and sound dialogue. Striking with other people’s money is always easier than cooperation.

This system reinforces conflict and the defiance mentality.

Clearly, this institutionalized plunder -- which implies an inequality between those who pay and those who collect -- generates jealousy, envy, and frustration among social groups. For economists Pierre Cahuc and Yann Algan, the combination of centralized granting of social “status” and social “rights” in the context of strong corporatisme (roughly, domination by special interests) has generated a society of “mistrust” and “defiance.”

That is why, although the French love the expression “social dialogue,” too many are in fact unable to have any kind of dialogue. They can’t speak to one another “horizontally,” across neighbor’s fences, as well as across professional groups, because they are used to talking directly to the government. The polarization of social relations by the government, “the Prince,” has undermined the internal dynamics of cooperation within civil society.

The crisis in Corsica is a good illustration of this: local entrepreneurs and farmers frustrated by the consequences of the strike by SNCM workers held a demonstration … in front of the Prefecture (the local government office).

Today, given France’s financial situation, discussion-based consensus is needed to implement urgent reforms. But the French social model has created the very vested interests that prevent its reform. With public finances in the red and more cuts urgently needed, more strikes will erupt for sure.

While free markets based on the rule of law teach us how to cooperate through contract and responsibility, and to peacefully sort out disputes, government regulation of social and labor relations, especially through the granting of differential statuses, creates conflict and abuse. France probably needs to quickly reform its "anti-social" model.

Emmanuel Martin portrait
Dr. Emmanuel Martin is the new director of the Institute for Economic Studies in Europe in France. Emmanuel holds a PhD in economics and has written dozens of op-eds and commentaries on various topics ranging from development issues to Europe or libertarian analysis. Learn More about Emmanuel Martin >