Peugeot strike puts French Socialists' austerity program to the test

The Talbot car division of Peugeot automotive, France's biggest private company, is at the center of a labor dispute that is forcing France's left-wing government to make a crucial choice: Should industry be made more efficient? Or should jobs be protected as President Francois Mitterrand pledged when elected in 1981?

Failure to grapple with industrial issues could cause French goods to be priced out of world markets by high labor costs and backward plant equipment. But a wholehearted attempt by President Mitterrand and his Socialist ministers to streamline France's big companies, most of which are state-owned, could cause a rift between the government and its traditional supporters in the labor unions.

The situation at Peugeot's Talbot facility at Poissy has been aggravated by the hostility of French unions toward Peugeot. Peugeot management is adamant that job cuts are the only way of saving the company, which was expected to lose unions decided to fight back.

The result has been a bitter battle involving management, union leadership, Poissy workers, and the government. Some workers went on strike in early December. Others were sent home by management. Production stopped. After a conciliation session, Prime Minister Pierre Mauroy announced an agreement by which 1,905 jobs would go and the government would pay for worker retraining.

But Poissy workers rejected the Mauroy compromise. During the New Year's weekend, militant workers occupied the plant until being expelled by police. Though work was due to resume Monday, the labor force was divided, and production remained at a standstill. Management had threatened to close the plant indefinitely and stop paying salaries if the strikers did not leave.

Most of the Poissy workers are immigrants from North Africa. They say retraining will do them no good. The attitude of such workers, and the apparent willingness of production-line staff to defy national union leaders, has brought out deep political differences in the ruling left-wing coalition. Georges Marchais, leader of the French Communist Party, which has four ministers in the government, was quick to jump to the defense of workers whose jobs are threatened. The Communist-led CGT labor federation and the Socialist CFDT union group are both distancing themselves from government policy.

This is particularly threatening because the Mitterrand administration is currently engaged in a long-term policy to cut France's chronic inflation and improve its trade position by clamping down on domestic purchasing power - hardly what left-wing voters expected when they put Mitterrand in power 2 1/2 years ago.

The Talbot battle would not be so bad for the government if it was an isolated case. But it is clear that the Socialists are going to have to deal with a string of similar problems in 1984 within the steel, coal, machine-tools, textiles, and shipbuilding industries. Big state-owned firms like the Thomson-Brandt electronics group, the Elf Aquitaine oil and chemicals company, and Pechiney aluminium have announced job cuts. Creusot-Loire, the privately owned heavy-engineering giant, is cutting 4,500 jobs as part of a government-backed plan to avoid bankruptcy.