On the "French" Waterfront

Forget the Teamsters, Auto Workers, etc., the French unions know how to get down to business, at least as far as benefits are concerned…

Hundreds of power cuts were organized by EDF employees affiliated with France’s powerful Confédération Générale du Travail union amid a broad strike last year. Among their other targets: the presidential palace housing Jacques Chirac, which had to switch to a backup generator, and two Paris train stations — stranding 300,000 commuters for several hours on June 28.

The sabotage was both a testament to the CGT’s clout and a sign of how much the union stands to lose if EDF, the world’s largest power utility in terms of production capacity, becomes a publicly traded company. The communist-leaning union commands the allegiance of more than half of EDF’s 110,000 French workers and controls the company’s social-benefits council.

The council is a vast welfare machine that subsidizes meals, vacations and cultural events for EDF employees, and provides them with free health care — all paid for with a huge budget funded by electricity consumers. EDF employees also enjoy lifetime employment, early retirement, subsidized housing and 90% discounts on their power bills, among other perks. The CGT has closely guarded these advantages for decades. If EDF is listed on the stock market, the union fears, investors will promptly put an end to them.

France’s attempt to partially privatize and skinny down EDF over the objections of unions like the CGT is a test case for one of the biggest challenges facing Continental Europe: whether it can trim its costly welfare states and shed the structural impediments that have long clogged its economy.

Across Europe, countries from Italy to Spain have for years wrestled with bloated public sectors. In France, the problem is especially acute. The country has 6.4 million public-sector workers — more than a quarter of its work force. Like EDF employees, they enjoy gold-plated benefits and are less productive than their private-sector counterparts. The result is a bulging state budget deficit that has breached European Union rules for three years running, and an economy, the world’s fifth-largest, that grew at a rate of 2.3% last year. By contrast, the U.S. economy grew at a 4.4% rate in 2004.

At any given time, as many as 5,000 EDF employees are without a job description or a real assignment, current and former employees say. Such employees, who report to work every day without anything to do, are often referred to as being in le placard, or the closet. EDF declines to give a specific figure for the number of employees without an assignment, but says “there are more and more workers whose job changes because of the constant evolutions in the energy sector.” The company adds that it devotes a lot of resources to training idle employees so they can take on new assignments.

Hat Tip to Jack P. for the article.

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