A sluggish French economy may force the hand of European regulators. It's almost an annual tradition. Spring arrives, and France's citizens take to the streets in protest. This season is no different. France is suffering its third day of a paralyzing strike that has brought transportation, utilities, schools, hospitals, newspaper distribution and mail delivery to a virtual standstill. Le problem¿? A government proposal to reform a ballooning retirement system that lets workers retire at half-pay by age 55 -- and sometimes sooner. The government knows it won't be able to foot the bill for a growing retirement-aged generation. Hence, it's proposing a reform that would require civil servants to work an additional 30 to 60 months, phased in over the next five years, to qualify for the full benefit. The reform is risky for Prime Minister Jean-Pierre Raffarin, who is just a year in office. The last government that tried to transform the pension system in 1997 was thrown out of office. The 25% of the French labor force (yes 25%) that works in the public sector represent a considerable voting constituency that could deliver Raffarin a similar result. Whatever the prime minister's fate, political and social turmoil during the interim is assured. So, too, is at least a week of economic stagnation brought on by the strike, a negative that will bite away at gross domestic product.
Political uncertainty and economic sluggishness are factors France could do without. GDP for the past three quarters has languished, scraping along just fractionally above zero. An unofficial U.S. boycott of France in the wake of disagreement over the Iraq conflict is also impeding economic growth. The U.S. normally represents about 10% of France's export market, and exports to the U. S. are already on the skids because of the slide in the dollar/euro exchange rate. Now many Americans are avoiding everything French, from Brie to Bordeaux, and possibly even larger ticket items such as Airbuses.