French inch toward social reform

Such case-by-case care, though labor-intensive, works, according to an EU report released last week. It found that this approach, including personal career coaching, training, and carefully targeted higher spending have helped lower unemployment in countries such as Denmark and the Netherlands.

Unless France makes some adjustments, the country faces major financial problems, warns the OECD's Mr. Martin, who heads the international organization's Employment and Social Affairs department.

"A fragile equilibrium has emerged under which 85 percent of the population is OK and 15 percent get benefit support," Martin explains.

"But in the long run an aging population is going to knock real holes in that." Already the government is having difficulty financing the growing gap between the social security system's revenues and its expenditures, leading to arguments over how to proceed.

Prime Minister Dominique de Villepin insists that cautious reform, such as the new labor contract he introduced this summer, will modernize France's social model sufficiently to keep it afloat. His leading challenger for the ruling party's presidential candidate's slot at the 2007 elections, Nicolas Sarkozy, advocates a "rupture" with the past.

"We must break with the unstable reforms and the hypocritical prudence which have led us up blind alleys for the last 30 or 40 years" he told a meeting of businessmen earlier this month. "The only social model worth the name is one that gives everybody a job, which ours does not," alluding to Britain's relatively successful "Anglo-social" model.

Mr. Sarkozy has not said how far he would break with tradition, and how broadly he would deregulate the economy. But his willingness to speak bluntly about the country's problems has won him growing support on both the right and the left.

"Most politicians will not risk saying that things cannot go on like this," says Mr. Glucksmann.

"But the French are smarter than their politicians believe: they know there is a pensions bomb, they know 10 percent unemployment is serious, so it is not impossible for a political leader to break the conspiracy of silence.

"The ones who talk about it are in a minority still," Glucksmann adds. "But they are beginning to talk."

There is no single European social benefits model. According to Brussels Free University economics professor André Sapir, there are four models.

In a briefing paper prepared for EU finance ministers prior to Thursday's Hampton Court summit, Mr. Sapir outlined the models, and argued that only the Anglo-Saxon and Nordic models are economically sustainable.

Anglo-Saxon - (Britain, Portugal, Ireland) This model features social assistance as a last resort. It's characterized by free markets, relatively less protection from firing, but vigorous measures to help unemployed find work. Health and other benefits are attached to employment, even for low-income jobs.

Many analysts say Britain has moved to an "Anglo-social" model, a hybrid of the Anglo-Saxon and Nordic models.

Nordic - (Finland, Sweden, Denmark, Austria, and the Netherlands) This model is marked by high taxes, and high spending on education, research, universal healthcare, child care, maternity leave, and welfare. It features less job protection, but higher employment rates than Continental and Mediterranean models. A strong social safety net lowers the risk of poverty.

Continental - (France, Germany, Belgium, Luxemburg). This social support model relies on state insurance-based benefits and pensions. Poverty is fought by protecting workers from being fired. Unemployment benefits are less generous than the Nordic model. Labor union membership is declining but still influential.

Mediterranean - (Italy, Spain, Greece) This model concentrates social spending on old-age pensions. It's characterized by strong protections against firing workers and generous early retirement plans. Unemployment and poverty rates are higher than other models.

Source: Bruegel, an EU-funded think tank in Brussels.

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