Posted 4:08 PM by Dil
France's dialogue of the deaf over pensions
By Martin Rhodes and David Natali
Published: June 12 2003 19:12 | Last Updated: June 12 2003 19:12

With workers in France on strike again this week over proposed pensions reforms, it is worth asking how this level of social conflict can be avoided and a more incisive reform achieved.

President Jacques Chirac says the way out of the dispute is "social dialogue", referring to the consultation and negotiation that typically precedes any effective pensions reform in Europe. When governments have tried to go it alone (Italy in 1994, France in 1995, and Germany in 1997) they have always been forced to retreat; where they have bargained, they have made significant, albeit gradual, progress towards deeper reform.

France has made slow progress on pensions reform. In 1993, the Balladur government was constrained by fear of protest: transition to new financial arrangements was slow and the burden of change was placed on the less unionised private sector. The Juppé reform in 1995 ended in abject failure when workers took to the streets and paralysed Paris. The socialist Jospin government tampered with the system but made no real changes. In the meantime, its financial imbalances and in- equities have worsened.

Jean-Pierre Raffarin, the prime minister, is unlikely to fare better without a change in style and strategy - including more of the social dialogue advised by his president. His proposals are not extreme. The most important would extend contribution periods for generous public sector pensions, from 37½ years to 40 in 2008 and 42 in 2020. New incentives would induce workers to delay retirement from 60 until 65 (the average is now 57½). Neither change would save the system. Much depends on spending less on unemployment - depending in turn on an unrealistically rapid return to full employment - and on raising more in social contributions and/or taxation.

But even this is too much for the unions that, apart from the reformist CFDT, have adopted a macho strategy of strikes and disruption to paralyse the state. To make matters worse, the government has fed the grievances of the radical teacher unions into this potent mix by linking pensions reform, unwisely, with changes to education. In this context, the government's unilateral approach is even less likely to succeed. Confrontation will not facilitate a more effective, enduring reform. There is no alternative to a blend of concessions and incentives to win over the majority of union support while isolating those for whom even the smallest concession is a bridge too far.

The objective should be a coherent reform package with clear long-term goals rather than a medium-term reduction in pension costs dependent on over-optimistic economic forecasts. By presenting this package as a means of rendering the entire French welfare state more efficient and equitable, opposition from the union side could be reduced while the existing but moderate support of the general public could be strengthened.

First, an expansion of the existing but small reserve fund to finance future pensions deficits (via general taxation and a new wave of privatisation) should be placed at the centre of the reform. This would not just improve long-term financial sustain- ability but would herald a new equilibrium between tax-based funding and social insurance. Reducing the burden of social insurance on labour costs would help raise France's low employment rate, itself a primary source of the crisis in welfare expenditure.

Second, providing much improved public pension cover for new and more flexible jobs, as in Germany and Italy, would achieve both social and financial goals. Apart from increasing the base of social contributions, by extending pension rights to those outside the current system, it would also render the distribution of benefits more equitable, making the unions' support of existing inequities even harder to defend. Third, any painful benefit cuts should be introduced with a long transition to reduce the short-term impact on older and more heavily unionised public employees. This would help stem support for the mass protests, win over the main unions and isolate the more militant sections of the labour movement.

Finally, Mr Raffarin should state these goals clearly rather than try to achieve them by stealth. Of utmost importance is a clear enunciation of the expected increases in social contributions and/or tax required to make the pensions system sustainable. Charles de Gaulle once said: "Since a politician never believes what he says, he is quite surprised to be taken at his word." After years of government prevarication, Mr Raffarin should speak clearly to the people and prepare to be believed.

The writers are professor of public policy and research fellow at the European University Institute, Florence

Posted 5:26 AM by Dil
http://www.guardian.co.uk/comment/story/0,3604,975421,00.html
Garton Ash - fantastic visit to Commons
UK needs to modernise through Europe etc etc

Posted 2:14 PM by Dil
I believe that membership of the euro can bring clear benefits to Britain in trade, investment and growth – benefits to British business, consumers and jobs. And our assessment will set them out.
Gordon Brown

Posted 1:41 PM by Dil
http://jefportugal.no.sapo.pt/info10eng.htm

Posted 12:22 PM by Dil
http://www.accountancyage.co.uk/News/1133656

Posted 2:47 AM by Dil
The flaw in the Eurosceptic argument is the notion that a united Europe would seriously undermine Britain’s ability to manage its own affairs; the idea of handing over more power to Brussels can so conveniently be misinterpreted as meaning that the nation is to be ruled solely by the capital city of a foreign country with no input of its own, rather than the reality of the joint administration of Europe enjoyed by Britain in common with the other member states.

David Heathcoat-Amory, the Conservative MP assigned to the convention drawing up the EU constitution, singled out the current high level of unemployment in Germany and said: “So we have little to learn and much to fear from the EU in this area” (report, May 27). But the substantial rise in unemployment in Germany coincided with the unification of the former West and East Germanies, with all the implications of helping to transform a former communist state into some semblance of compatibility with its other half and, as yet, it is premature to judge whether or not such heavy investment will have paid off.

It is my experience as a German national that, with the possible exception of books and shoes, most goods, including food, are less expensive in Germany than in Britain, despite the fact that people in Germany earn more than their British counterparts. Why anyone should seek to preserve the rough deal of the British economy is beyond me.

Yours faithfully,
MONIKA BIDDLECOMBE,
48 Norbins Road,
Glastonbury, Somerset BA6 9JE.
June 10.


From Mr Nicholas Huber

Sir, If indeed the eurozone’s industry, services and business sector are fast shrinking and there are fears of a general stagnation and a new German recession (Business, June 6), then the answer to joining this sinking ship is “no”, either now or at any time.

A child of five would understand this. The Government should send someone to fetch a child of five (with apologies to Groucho Marx).

Yours faithfully,
NICHOLAS HUBER,
23 Newport Street,
Tiverton, Devon EX16 6NL.
June 9.


From the Director of the Consumers’ Association

Sir, Contrary to your report today, the Consumers’ Association is neither a supporter nor an opponent of UK membership of the euro.

Our research so far indicates no significant adverse impacts on consumers from the UK joining the euro, unless transition itself is managed in a way that allows unscrupulous traders to take advantage. Given some of the abuses that occurred in “first-wave” countries, however, the voluntary approach to the provision of price information in pounds and euros during a UK transition, as envisaged by the Government yesterday, appears to us wholly inadequate.

Our research also suggests that the benefits of the euro to UK consumers would be fewer than is sometimes claimed, and might be achieved in the long rather than the medium term.

Yours sincerely,
SHEILA McKECHNIE,
Director,
Consumers’ Association,
2 Marylebone Road, NW1 4DF.
June 10.


From Lord Watson of Richmond

Sir, On the euro, the most important test for the Government was that of political courage.

Sadly, it has failed that test.

Yours faithfully,
ALAN J. WATSON,
House of Lords.
June 9.


From Mr Dave Powell

Sir, Your sketch writer (“How Gordon tap-danced on €0.0840666”, June 10), got his currencies in a twist. The sixpence is 6d, that is 2.5p, so Mr Brown tap-danced on €0.03526 (at a rate of €1.4104 to the pound). Ben Macintyre inflated it by 140 per cent.

He is obviously too young to remember.

Yours faithfully,
DAVE POWELL,
22 Ayresome Park Road,
Middlesbrough TS5 6AR.
June 10.


From Mr Ian Partridge

Sir, It is a pity that the Government was not as scrupulous in satisfying the conditions for military action against Iraq as it has been in satisfying the conditions for entry into the single European currency.

Yours faithfully,
IAN PARTRIDGE,
Prospect House,
338 Hollingwood Lane,
Bradford, West Yorkshire BD7 4AY.
June 10.

Posted 5:51 AM by Dil
http://www.personneltoday.com/pt_news/news_daily_det.asp?feed=rss&liArticleID=19283personnel chief says employment same under euro

Posted 4:29 AM by Dil
June 10, 2003

Scottish independence and the euro
From Mr Angus MacNeil



Sir, Lea Paterson (Business, June 3) is absolutely right that a country with a freely floating currency has a number of ways to adjust to economic blows using exchange rates, interest rates and government tax and spending. However, she need not look to Europe to see where the one-size-fits-all theory has gone wrong.
Within the sterling zone, Scotland is saddled with the high interest rates designed for the South East of England; hence lost jobs, migration and recession (or at best, limited growth). Nor does the Scottish Government have any control over taxation policy.

The eurozone interest rates would be better for Scotland and, given the fact that independent nations within the EU control their own taxation, thus their economy, I conclude, as a Scottish nationalist, that being an independent country within Europe is better than being a dependent country in Britain.

However, despite wanting the better fitting euro for the Scottish economy, I am in the difficult position of not wanting to see the economy of the South East of England lose a tailor-made currency together with all its benefits.

As a comparison, when Ireland separated its exchange and interest rates from the UK in March 1979, it set a course which saw it become wealthier than Britain. However, this also benefited the UK, which, rather than support a failing entity, now trades more with and is more connected to a vibrant and growing neighbour than at any point in history.

Can we in Scotland and the rest of the UK learn something here?

Yours,
ANGUS B. MacNEIL,
1 Fife Place,
Fort William, Lochaber PH33 6UR.
angus.macneil@gearasdan.freeserve.co.uk
June 4.

Posted 4:26 AM by Dil
http://www.timesonline.co.uk/article/0,,482-708842,00.html
June 10, 2003

A map, gobbledegook, but no final destination
Matthew Parris



There are occasions when a House of Commons event marks a turning point in political history and yesterday was one. A critical mass of Tory MPs quietly and sadly concluded that sooner or later Michael Howard will have to become their leader. Nothing much else happened: certainly not on the single-currency front.

Posted 2:58 AM by Dil
http://www.guardian.co.uk/comment/story/0,3604,974069,00.htmlA tight Treasury fist still grips our European future

Brown's statement represents a great victory for the anti-Europeans

Hugo Young
Tuesday June 10, 2003
The Guardian

Gordon Brown laid down his platform for the great euro pronouncement on Sunday. "Tony Blair and I have decided," he told David Frost, "that we should put the pro-European case. I believe we can unite the British people around a pro-European consensus, which I believe is vital to the future of this country." This sounded like a vaulting promise of a new direction. In fact it was an epitaph on six years of timidity, deception and failure.
Given the history, they were words of blithe effrontery. Brown repeated them in his statement yesterday. "A modern, long-term and deep-seated pro-European consensus" would now be built, he said. This he offered as a brilliant plan, not hitherto available, which is going to change the politics of Britain, in the service of an economic policy - joining the euro - to which the government remains committed, however, in roughly the same cautious and contingent language it was using in 1997.

Posted 3:46 PM by Dil
International Herald Tribune LONDON
"Are we there yet?" For now, Britain's answer is no. But in rejecting an immediate referendum on whether his country should join the euro, Gordon Brown, the chancellor of the Exchequer, on Monday presented a road map toward what he insisted was the ultimate destination - membership in the single currency.
.
Formally announcing the worst-kept secret in Britain, Brown confirmed that Britain had not yet passed the five economic "tests" that were used to assess the country's preparedness for euro membership. Only one of those gauges, the effect of the euro on Britain's powerful financial services industry, was clearly positive. The other four measures, which weighed the convergence of Britain's economy with the 12 countries sharing the euro, the effect of membership on economic policy flexibility and the impact on jobs and investment, were negative.
.
But Brown also outlined what he called "concrete and practical" steps aimed at aligning Britain's economy more closely with the euro zone - and, perhaps more importantly, at shifting public opinion in a country that remains decidedly skeptical about its neighbors across the English Channel.
.
Brown made it clear that what Europe does by next spring, when another assessment of the tests will be carried out, may be as important as any steps taken in London. He has long been a critic of Europe's relatively inflexible labor markets, as well as the rigidity of the Stability and Growth Pact, the rules enforcing fiscal discipline under monetary union.
.
Brown said the government would issue new recommendations for economic reform in Europe this week.
.
If labor-market reforms, such as a proposal by Chancellor Gerhard Schroeder of Germany to sharply scale back unemployment benefits, gain momentum on the Continent, the British government could argue next year that the euro zone is moving in the right direction.
.
"Brown is rightly making EU reform a centerpiece of U.K. government policy," said Digby Jones, director-general of the Confederation of British Industry, an employers group.
.
Though opposition to the euro for many Britons is rooted in deep concerns about national sovereignty, Brown said several steps outlined Monday could make eventual euro membership more feasible. He said Britain would change the way it calculated inflation to bring it into line with the euro zone, adopting a "harmonized" measure of price increases that excludes housing prices, which do factor into the current inflation gauge.
.
While the change may seem arcane, it is significant for Britain because it has a much more volatile housing market than many euro-zone countries. In an effort to address that discrepancy, which Brown cited as a barrier to convergence, he said the Treasury would examine the possible benefits of shifting more Britons onto fixed-rate mortgages, which are predominant on the Continent. Currently, most mortgages in Britain use variable rates that fluctuate according to the level of official interest rates, and economists say that is one reason for the runaway gains in home prices.
.
"The volatility of the housing market and potential for higher inflation is a problem for stability that we are determined to do more to address," Brown said.
.
Perhaps more difficult to address will be the value of the pound, cited as another possible barrier to euro entry. Brown wants to avoid the fate of Germany, which many economists say joined the single currency with an overvalued exchange rate, based on the value of the Deutsche mark compared to other currencies that predated the euro.
.
One of the 18 studies published to support Brown's assessment says the pound would have to fall to less than E1.37 ($1.60) to make membership viable.
.
Though the pound has fallen sharply against the euro over the last year - a slide that accelerated Monday - it was still trading at E1.42.
.
While the differences between the British economy and its euro zone counterparts are significant, Brown said, they are not insurmountable.
.
Indeed, he said Britain is "in a better position than some current members" on convergence with potential partners in the currency bloc.
.
That argument, however, is unlikely to sway hard-core critics of the euro. "The tests are not met now and will not be met in a year or two's time," said Simon Wolfson, chief executive of Next PLC, a retailer.
.
International Herald Tribune

Posted 3:28 PM by Dil
discussion between elliot and hutton
http://politicstalk.guardian.co.uk/WebX?50@@.4a913ec5

Posted 2:41 PM by Dil
You put your questions on the euro to Chris Bryant, Labour MP for Rhondda and chairman of the Labour Movement for Europe and to shadow treasury minister Stephen O'Brien, Conservative MP for Eddisbury, in a LIVE interactive forum on Monday, 9 June.
http://news.bbc.co.uk/1/hi/talking_point/2969772.stm

Posted 6:03 AM by Dil
grudgung leader, half heartedly poles are in
http://www.telegraph.co.uk/opinion/main.jhtml?xml=/opinion/2003/06/09/dl0902.xml&sSheet=/news/2003/06/09/ixnewstop.html&secureRefresh=true&_requestid=207358

Posted 5:51 AM by Dil
It will have a "huge and irreversible" impact. It is about terminating "our independence and sovereignty". It is the end of "1,000 years of history". And that's only the Daily Mail, exhorting readers to push off to the nearest Wetherspoon pub and cast their anti-European-constitution-riff-raff-referendum vote over a glass of Stella Artois (or Heineken) on Thursday.
http://www.guardian.co.uk/comment/story/0,3604,973321,00.html

Posted 5:45 AM by Dil
Why a euro-vote is not for us

Larry Elliott
Monday June 9, 2003
The Guardian

It's the worst kept secret in the world that Gordon Brown will stand up this afternoon and announce that Britain is not yet ready to join the euro. He will sugar the pill by outlining the steps that need to be taken if the obstacles to membership are overcome, a stratagem designed to pacify those who were certain that Labour would use its second landslide majority to take Britain into the single currency.

http://politics.guardian.co.uk/euro/story/0,9061,973581,00.html

Posted 5:40 AM by Dil
But it said that in the long run, greater price transparency should make searching for cheaper deals easier, boosting trade and competition.
http://politics.guardian.co.uk/euro/story/0,9061,973760,00.html

Posted 12:33 AM by Dil
Hattersley, promote euro, not join yet
http://www.guardian.co.uk/comment/story/0,3604,973326,00.html