Europe trims generous perks to spur economy

That sparked predictable outrage, but in general the German trade unions have come to terms with the government's plans. They, like Mr. Schröder, have taken note of public opinion polls that show most ordinary Germans agree that things cannot go on as they are.

With the economy stagnant for the past three years, young people struggling to find jobs, and a general mood of depression, "the government is up against a wall; it has to act," says Mr. Leibfritz.

"In some countries, only a sense of crisis allows structural reforms," he adds. "It is often easier for politicians to impose reforms during a downturn, because that is when people feel that fundamental changes have to be made."

The public mood became clear last month, when Europe's biggest trade union, IGMetall, was forced to call off a month-long strike aimed at shortening the workweek in eastern Germany.

Fearful of the country's 10.7 percent unemployment rate, even IGMetall members opposed the strike, which marked the union's first failure to win its demands since 1954.

In France, the government's job of pushing through pension reform was eased somewhat by the fact that the country's biggest union supported the plan. Unusually for France, public opinion lost patience with the strikers who brought public transport to a halt earlier this summer in their bid to thwart the reform, and the protest movement petered out.

But it has not died, and some union leaders are promising more strikes in the autumn, when the government is expected to unveil its proposals for reforming the social security system, which is due to lose $9 billion dollars this year.

"Social security and pensions represent the choice we made in 1945, as a result of the war," Marc Blondel, head of the radical Workers' Strength union, told French radio last week. "We have to defend these fundamentals, it is indispensable."

Mr. Raffarin, bruised by the angry conflict over his pension reform, has clearly taken some lessons to heart. In future, he said Thursday, his government will make "social dialogue" a "national priority," and he hinted that he might take longer than initially planned to carry out some of his reforms, so as to make them more palatable.

That sort of caution would be anathema to Italian premier Silvio Berlusconi, who has been pressing ahead with labor-law reforms, and brushing off opposition from some unions. In doing so, he has been aided by Italian voters, who have shown sympathy for his policies.

In June, only 23 percent of Italians bothered to vote in a referendum, promoted by Italy's largest trade union, that would have increased job security for workers at small companies.

In Austria, meanwhile, another center-right government has been forthright about its goals as it makes citizens work longer for their pensions and cuts back on social benefits.

Finance Minister Karl-Heinz Grasser told a conference of business managers 10 days ago that he intends to turn Austria's welfare state into "a modern, social, performance-oriented society" through "privatization, liberalization, and deregulation."

Some observers, however, caution that the new enthusiasm for reform in Europe may fade as elections loom, especially since it could take a year or more for the reward of higher growth to make itself felt. And more remains to be done, says the OECD's Leibfritz.

"What is happening is certainly promising, now that the big Continental countries are following the smaller ones" such as the Netherlands, Spain, and Scandinavian nations, which have already reformed pension schemes, relaxed labor legislation, and trimmed aspects of their social security systems. Leibfritz says. "But I wouldn't overemphasize things: more moves have to come."

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