Crisis in the welfare state
FRANCE MARC ULLMANN
Paris—M Michel Debre is perhaps the most worried man in France. Long one of the inti- mates of General de Gaulle, at the head of the most important ministry—finance—he knows that he is approaching a critical challenge : the reform of social security.
M Debre has no choice. La securne sociale (roughly France's equivalent of the British wel- fare state), a formidable apparatus set up just after the Liberation which has brought unpre- cedented benefits to all French wage-earners, is itself sick. This year its budget is three thousand million francs (almost L220 million) in the red, and if no one reforms the system the deficit will go on increasing year after year; for expenditure on the health service alone is increasing twice as fast as personal incomes. At the present rate the gap between social security revenue and costs could be more than ten billion francs (about £725 million) by 1970—that is, very nearly the sum of the total annual profits after tax of all French business.
The problem is not new and indeed all the developed countries have had some experience of the difficulties set by the rising costs of the health service. But in France many people have the firm conviction that the state itself must provide all that is necessary and even more. The very idea of reform seems intolerable to them.
The French system differs from Britain's chiefly in that the burden on employers is very much heavier. For each employee earning not more than 1,140 francs (about £82 10s) a month, the employer has to contribute the equivalent of 15 per cent of the man's total wage and the em- ployee himself another 6 per cent. Above 1,140 francs a month contributions remain fixed.
In fact most of the experts are agreed on what the solution ought to be. They believe that the rise in medical costs must be checked and that employers should no longer have to make up the social security deficit: at present they bear 70 per cent of total social security costs as against an average of 40 per cent in the rest of the Common Market. These payments, which are automatically passed on to consumers, form one of the barriers to the expansion of French exports.
A number of remedies are envisaged: an increase of 2 per cent on contributions by
• employees so that they would go up from 6 to 8 per cent over a period of three years; a supplementary tax of 2 per cent on earnings above the present maximum figure of 1,140 francs; a cut in the rate of reimbursable pay- ments on medical expenses from the present 80 per cent to around 70 per cent; and finally a frank admission of the principle that certain minor medical expenses ought not to be refunded by the state at all.
Even if the government could count on the support of some 270 well-drilled deputies, the reform would still arouse a storm -of protest in the Assembly. But since the government's majority is so slender an epic battle is likely. High and low income-earners alike are against the reform. The doctors oppose it because they know that a cut in the rate of repayments to
patients would reduce the number of their cases. The chemists are up in arms because they know that there would be greater official surveillance of their activities: none of them will admit that the chemists have been the principal beneficia- ries of social security. Wage-earners, doctors, chemists and the entire opposition, all have their guns trained on the government and, more particularly, on M Debre.
Yet in private the opposition leaders freely admit that in its broad outline the govern- ment's plan is wise. They agree that there is no other way of restoring order to a system whose only fault has been that it has worked too well. They will concede finally that, taking into account the genuine improvement in French living standards since the war, it is not too much to ask people to increase their contribu- tions to the health service.
At the same time, however, the opposition argues that such a reform ought to be linked to a reform of the whole tax system. The Federa- tion de la Gauche has in its, programme a. very detailed series of proposals on this subject which were prepared by one of the best financial brains in France, a member of the shadow cabinet, M Pierre Uri. But the government has not the slightest intention of touching this other hot potato—the French tax system. The' opposition, however, has no scruples : it will resolutely oppose the government on the easy- ground that is being offered—social security.
M Debit, of course, is taking good care not to reveal at what stage he is planning to put his proposals before the Assembly. Before the for- mation of the new government a number of General de Gaulle's advisers suggested a series of social measures which would be likely to make up—at least partly—for the unpopularity of the reform of social security. These would include in particular the creation of a national security fund which would be added to the fund for unemployment benefits, with the aim of helping retraining programmes while providing substantial compensation to workers who be- come redundant. Nothing has been decided so far. M Jacques Chirac, a former aide of M Pompidou, the Prime Minister, and now for the first time a deputy, has been appointed state secretary specifically charged with problems of employment. Probably M Debit will come round to the idea of a package deal designed to submerge the social security reform beneath a wave of other measures, some popular, some less so. But the new government clearly needs
several months to prepare for the coming fight.
One suspects that President de Gaulle intends to give the measures a send-off when he holds his next press conference in about a month's time. In the face of the difficult decisions that have to be taken and the opposition they will arouse, the General believes that it is his duty to put his authority behind them. This time there is no question of his neglecting the house- keeping in the belief that things will look after themselves. They do so no longer. This time the wolf is at the door.
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