1995-96: REVIEW AND OUTLOOK : Sluggish Pace Will Bring Social Conflict

As a train conductor in the French capital, Alain Trille has a guaranteed job, retirement at nearly full pay at age 50, five weeks’ vacation and free train tickets. But his company, the state-run railway, operates 3,750 miles of money-losing lines, has twice the number of employees it needs and spends $35 billion a year more than it makes.

That was the battle line in the 24-day public transport workers strike that ended in France last month, and it offers a disquieting picture of what is in store for much of the rest of Europe this year.

As do other industrialized regions, Europe faces slow growth: The Organization for Economic Cooperation and Development recently cut its growth forecast for European countries to 2.6% from an earlier projection of 3%.

Among the OECD’s 18 countries, the worst hit are Germany, France and Britain, where growth “has slowed sharply” because of “a weakening of final demand,” the Paris-based international research organization said.

Moreover, governments--under pressure to meet guidelines for inclusion in the planned single European currency--are moving to cut public spending, privatize state companies and deregulate industries. And those reforms face stiff resistance from Europeans wedded to worker perks and generous social welfare benefits.

At issue, for the workers and consumers, is nothing less than a way of life that has grown up in Europe since World War II. Having come to depend on inexpensive high-quality government services, from mail delivery to health care, Europeans now fear their countries are heading toward U.S.-style, profit-driven economies that will bring a lower quality of life.

“These are not really perks. We’ve earned them,” insisted Trille, 44, speaking at a protest march through the streets here. “We’re willing to make sacrifices, but this is too much.”

The French strike has ended, but perhaps only temporarily. Prime Minister Alain Juppe has agreed to redraw his plan to restructure the state railway, to postpone an overhaul in the tax system and to protect French public services from the deregulation ordered by the European Commission.

But his overall reform plan remains mostly intact, including reduced health benefits and welfare charges that will affect all French workers. After long post-strike meetings with Juppe, union leaders now predict more labor unrest in the new year.

Even as France’s strike was ending, trouble was spreading elsewhere. Rail and air workers in Belgium went on strike over job cut plans, and similar labor trouble is expected in the public sectors of Spain and Italy, two countries that desperately want to reduce their deficits in time to qualify for European monetary union.

European leaders insist that monetary union is necessary to boost intra-European trade by reducing the billions of dollars spent annually on money exchanges and to enhance the trading power of the continent.

They say it’s on track, and, last month, they even chose a name for the new currency: the “euro.” If all goes as planned, 15 national currencies will be replaced by a single one on Jan. 1, 1999.

But it will take more than a new name to make monetary union work. And the European Union’s council of ministers will decide in 1998, on the basis of 1997 economic performance, which European countries will be allowed to join.

So far, only Germany, the economic powerhouse of Europe, is assured of meeting the guidelines. Most other European governments are under intense pressure to stabilize their currencies, increase economic growth and reduce state deficits. For most, that will mean picking fights with increasingly restive citizens who appear unwilling to endure short-term pain for long-term gain.