Ministry of Finance reform shelved

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On 20 March 2000, the French Minister of Finance, Christian Sautter, announced in a press release that the planned reform of the Ministry that he had unveiled in January was to be shelved. Upon leaving his post one week later, the former Minister spoke out against the "conservative" attitude of Ministry of Finance trade unions, which in his opinion, had caused the reform to founder. This explanation is regarded by some commentators as simple but insufficient.

A plan to reform the Ministry of Economy, Finance and Industry (Ministère de l'économie, des finances et de l'industrie) was unveiled by the Minister of Finance, Christian Sautter, in January 2000 (FR0002142F). The launch of the plan had been preceded by a public opinion awareness campaign and the announcement of progressive job cuts in this Ministry. As early as autumn 1999, the trade unions had expressed their disagreement with a process which pre-empted the outcome of talks yet to take place. It soon became apparent, following several months of internal discussions within the various departments of the Ministry, that these departments intended to move on only a few minor points during negotiations.

Industrial action and talks

Following several months of unrest, the seven trade unions represented at the Ministry (which employs 192,000 civil servants) organised a series of "black Thursdays", consisting of strike action, demonstrations and tax office closures every Thursday, starting in early February. This action took the form of rotating strikes, the success of which should arguably have sounded alarm bells for Ministry officials. However, both they and the Minister himself appeared continually to underestimate the numbers taking part in this industrial action, which over the weeks gradually brought many tax offices to a halt. On 9 March, even though over 300 tax offices out of a total of 850 had stopped working, the Director General of Taxes was still telling the Le Monde newspaper that the industrial action had involved only 4%-5% of employees. A little time later, the Minister had to take the "panic measure" of announcing that the deadline by which all French people are required to file their income returns with the tax department – normally 28 February - had been extended to the 31 March.

There had been no action on talks since 10 February and the first round of negotiations between the unions and the Minister was not held until 10 March. Two days earlier, the Minister had been coolly received in parliament by Socialist deputies, who criticised him for a reform project that had been "poorly prepared, poorly initiated and poorly explained". Following six hours of talks with the unions on 10 March, Mr Sautter tabled a proposal. This proposal, which was accepted by the participants, provided for a review of the whole issue of reform and stipulated that "no decisions would be made without taking into account the outcome of the new debate." The unions' favourable reaction was short-lived since the following day a directive from the Director General of Taxes to all département-level directors, asking all local officials to withdraw scheduled reforms "for a short time," was made public. The unions attacked what they called "double speak" and maintained their pressure tactics despite Mr Sautter's claims that he had acted in good faith. A fresh national demonstration rallied 20,000 in Paris on Thursday 16 March. At the Treasury, tax and customs departments, 60%, 55% and 35% of workers respectively were on strike.

Proposal rejected and reform shelved

It took no less than 16 hours of talks on 17 March to produce a proposal that the unions agreed to submit to their staff general assemblies. Opinions were divided. Some pointed to the proposal as a possibility for compromise, others to the inadequacy of the tangible commitments. In terms of the unions' major demand for the cancellation of staffing cuts, a concession was made to "freeze" the 2001 round of job cuts. However, no matter what their opinion of the proposal, all the unions were sceptical as to how civil servants would react, believing that a few new convoluted sentences would not hold much sway after several weeks of industrial unrest and several days of strikes.

On Monday, 20 March, one by one, the general assemblies did indeed throw out the Minister's proposals. Worse still, the industrial action was stepped up. New Treasury computing departments were occupied, threatening the civil service pay system. The Prime Minister, who was already facing a simultaneous uprising among teaching staff against the Ministry for National Education (FR0004153N) and who the following day was to announce measures to reform the pension system – in particular that for civil servants – asked the Minister of Finance to withdraw the contentious reform before it had too disastrous an impact on the civil service as a whole.

On the evening of Monday 20 March, Mr Sautter announced the withdrawal of his reform. On 23 March, there was a general return to work and in the reshuffle of 28 March, Mr Sautter was relieved of his cabinet post and was replaced by Laurent Fabius. The same day, the former Minister, in a press release, attributed the failure of the reform to the "conservative" attitude of the trade unions. The unions were not at all triumphalist and stated that reform was indeed necessary. The new Minister is to carry on the idea of reforming the Ministry, but this time taking the necessary time to hold dialogue with, and hear input from, not only the unions but also elected representatives and taxpayers.

Commentary

Although the officials at the Ministry of Finance face relatively strong trade unions, they are not normally given to negotiating what they consider to be their exclusive jurisdiction. The idea of implementing "their" reform process through genuine collective negotiation was as foreign to them as consulting parliament on the allocation of the growth-generated tax-related surplus.

Therefore, there were many errors, including: a preliminary review carried out by the General Finance Inspectorate alone; no external review body; and no review of the social context of the implementation of such a plan. Civil servants were very unhappy at the canvassing of public opinion which took place. Ministry officials, in pointing out the very high cost of the current taxation service and the fact that cutting many jobs would enable new resources to be channeled to teachers and hospitals, did nothing to encourage staff to back the reform. In light of such a "comedy of errors", it is hardly surprising that the reforms foundered.

Did all the unions really want reform? Undoubtedly, not all wanted the same changes. However, they were all committed to two principles. First, to playing a role in the process. Second, that assurances be given that the reform process would not be hampered by job cuts. On the first point, the unions were "consulted" too late in the day to have any impact on the content of the reform project. On second point, job cuts soon became a major pillar of the reform, with the Minister rejecting any compromise on this issue. However, if this was the price that had to be paid to make the reform acceptable or even bring the unions on board, then it was better to postpone cutting a few thousand jobs, which were undoubtedly less of a luxury than the General Inspectors of Finance believed. The inability to reach an agreement and to grasp the creative function of negotiation brings into question the overriding culture among senior civil servants, especially those at the Ministry of Finance. The new Minister of Finance has committed himself to clean up the mess somewhat by going back to the drawing board and implementing a consultation process on the reforms to be made. (Jean-Marie Pernot, IRES)