Beyond the Standoff

More than most heads of state, Charles de Gaulle is fond of the conspiratorial theory of human events. Last week, when 2,500,000 French workers walked off their jobs after the collapse of wage talks between unions and the government, he went on TV and condemned the strikers as "agitators" and "plotters" whose tactics "threaten to sink the currency, the economy and the republic." De Gaulle told France: "Need I declare that they will all be defended?" He had good reason to fear any thing resembling the massive strikes that caused chaos in France last spring.

The work stoppage lasted only 24 hours, but it demonstrated that union chiefs had support for their demands from the rank and file and that they probably could call the workers out again at any time -- with even greater effect. This time, the mail piled up, garbage went uncollected and transportation by bus, train or plane came practically to a standstill. Power blackouts forced Parisians to dine in cafes by the flicker of candles or the glow of gas lamps. About 150,000 workers marched along rain-splattered streets to the Place de la Bastille. Students crashed the demonstration and when they surged through the workers' lines, they ran into riot police. More than 230 were arrested.

French workers are eager for wage increases to cover cost-of-living increases. Prices have been rising by an annual rate of about 6%, faster than in any other Common Market country. Consumer costs have been swollen further by huge tax increases designed to dampen demand. Inflation has debased the currency to the point where, for the first time in years, black marketeers are selling francs for stronger money at discounts of 5% or more. The economy's weakness has so greatly affected the country's political power the French are no longer campaigning in world banking councils for an increase in the price of gold. Because the strike was brief, the French franc rose slightly and gold prices receded from their record highs on European bullion markets.

Question of Confidence. De Gaulle had to settle for a standoff. Now he must somehow achieve a labor settlement that will be noninflationary, yet generous enough to head off upheavals by workers. The government, aware that any wage boosts of more than 6% a year would greatly aggravate inflation and almost certainly force the franc's devaluation, has offered workers in nationalized industries only 4%. The unions are holding out for 10% or more. De Gaulle's immediate problem is that he will either have to accept devaluation or pursue the kind of restrictive policies that could bring on a recession.

For the longer term, the only way that the French can have the incomes that they would like and avoid devaluation is to improve the efficiency of their economy, which is fragmented into countless small businesses. Even more urgent, as the conservative newspaper L'Aurore noted last week, is the task of "restoring the confidence" of the French people in their government. Said L'Aurore: "Rarely have Frenchmen in all social categories demonstrated such dissatisfaction with the way in which the government is managing the nation's affairs." Until confidence is restored, the franc--and France--will continue to be unstable.

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