- The Washington Times - Monday, June 30, 2003

PARIS — French vacationers have shrugged off the national mood of pessimism and headed for beach and mountain resorts — apparently the only economic sector which so far has resisted a creeping recession.

Summer vacations have given the conservative government of Prime Minister Jean Pierre Raffarin a bit of relief, at least for the time being.

Problems such as the persistent drop in consumption, growth of unemployment and threats of more labor unrest have persisted.

Strong opposition remains to the pension and social-security changes planned by the government, yet most French officials insist that changes are essential if France is to remain one of the leading powers of the European Union.

“This country is to get a hold of itself or France will come to a complete halt,” said the ruling Presidential Majority Party in a statement.

The government’s policy was recently summed up in a brief appeal to the country: “You’re going to have to work a little more to save the system,” one of the most generous “cradle-to-coffin” social schemes in the industrial world.

Contrary to earlier expectations, the end of the war in Iraq and of the accompanying international tensions have not affected the pessimism of the average French voter.

Economic indicators point downward, and experts doubt official forecasts of 1.3 percent growth in the current year.

According to Philippe Waechter, an economist, “the trend shows clearly the deterioration of the labor market and lack of hope for improvement.”

The latest Ipsos-Sofinco poll showed that 57 percent of the French are pessimistic about France’s economic future.

“Even lowering of taxes would have weak impact on consumption,” said Emmanuel Ferry, an economic analyst.

Recent figures showed a 4.1 percent drop of clothing purchases and 3.7 percent drop of car sales in May.

The government blames the downturn on public-sector strikes in May and June, in opposition to a plan to delay retirement age in order to finance state-supported pensions.

The plan is to be accompanied by efforts to decentralize the costly bureaucracy.

The recent strikes prompted many editorialists to wonder whether significant change is feasible in a country firmly set in its ways.

The government blames most difficulties on the recent strikes and asserts the economy is further burdened by the 35-hour workweek inherited from the socialists who were voted out of power a year ago.

Unemployment stands at 9.3 percent of the labor force, but according to many economists the figure hides the fact that one out six wage earners works on a part-time basis for less than the minimum wage of close to $1,000 a month.

Adding to France’s woes, its wine sales in the United States have plunged and U.S. companies largely ignored the annual Paris Air Show this spring, reflecting lingering discord between the two nations.

France is not the only EU country facing problems. Germany has promised lower taxes next year to encourage spending, and the union is wondering where to obtain funds to help the 10 new members next year — most of them expecting subsidies.

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