Staff unhappy about Ministry of Finance reform plan

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In January and February 2000, civil servants in France's Ministry of Economy and Finance took part in a number of well-supported one-day strikes, following the announcement of reform measures by the Minister, Christian Sautter, aimed largely at simplifying procedures and bringing the taxation system closer to the tax-payer. Trade unions claim that there have been no real negotiations on the plans.

As soon as Dominique Strauss-Kahn was appointed head of the Ministry of Economy and Finance in 1997, he initiated projects to reform his Ministry, which is reputedly the most powerful and untransparent in the whole French bureaucracy. His successor, Christian Sautter, continued this ambitious project, which affects the very structure of the Ministry and in particular the jurisdiction of the two largest departments, the Department of Revenue (Direction générale des impôts, DGI), and the Department of Public Accounting (Direction générale de la comptabilité publique, DGCP), which is also known as the Treasury. The Minister's reform project, which was preceded by a major information campaign aimed at public opinion, met with unanimous disapproval from the trade unions. This Ministry has one of the highest union membership rates in France.

A preliminary report concerning the modernisation of the Ministry of Finance was submitted to the Minister in February 1998. This report resulted in an initial series of reforms, including bringing the Ministry of Industry under the umbrella of the Ministry of Finance. Two months later, under the auspices of a project dubbed "Mission 2003", Mr Strauss-Kahn charged two senior Ministry of Finance officials, Thierry Bert and Paul Champsaur, with developing much more far-reaching proposals in two areas: first, a rationalisation of services adapted to a planned simplification of the taxation system; and second, giving particular attention to the specific needs of small business. Mission 2003 was rapidly to set out a framework of ideas for comprehensive reform, which the Minister would draw on in his various waves of decision-making in this area. The Mission 2003 report submitted in January 2000 was immediately followed by the announcement of a first batch of measures by the Minister. The scale of these reforms surprised the unions, local elected officials and parliamentarians alike.

General rationale behind the reform process

The French taxation system is very cumbersome and complex for several reasons. The system is dominated by two major principles of accounting organisation. First, the area of expenditure is separated into two jurisdictions - one responsible for authorising payments and the other responsible for recording them. Second, revenue matters are also separated into two jurisdictions - one dealing with levying and auditing tax, the other with managing tax collection. These two principles are costly in terms of both personnel and funds. This division also confuses the public, which often does not know who is responsible for any given taxation-related procedure. This situation is further complicated by the fact that this separation of jurisdictions is not fully complied with. In fact, the Department of Revenue both collects and audits a considerable amount of indirect taxes such as value added tax (VAT), which represents roughly half of all government tax revenue.

The running of the French taxation system is also adversely affected by complex and ever-changing tax regulations. The General Tax Code (Code général des Impôts) is a hefty volume, which is continually amended and added to. In addition, in the 1960s, it was decided that the Treasury should move closer to taxpayers. A widespread network of taxation offices, to which local elected officials are very committed, plays a role in local life and activity in the regions. It is for these reasons that the French taxation system is more expensive than that of neighbouring countries. At least, this was the starting point of the Bert-Champsaur Mission 2003 report.

The Bert-Champsaur report recommended: doing away with the obsolete separation principle; streamlining the state's accounting offices, in particular by eradicating duplication; and using information technology and telecommunications systems to replace actual officials dealing directly with the public. The measures announced by Minister Sautter are a first step in this direction.

The most important change is the adoption of a "taxpayer-centred" organisation of services. Mission 2003 urges a simplification of taxation procedures and above all, the establishment of a "one-stop shop" for companies and another for individuals. These two major points were highlighted by the Minister when he announced his first series of reforms.

The reform implementation schedule is quite ambitious, especially given the highly hierarchical management system at the Ministry of Finance, which does not naturally lend itself to such a daring timetable. In order to overcome this obstacle, the Minister has undertaken fully to involve senior officials in the implementation process, while asking for the support of public opinion. The unions, feeling that the reforms are being pushed through, reacted very negatively. They were less concerned by the main points of reform than by the method and by the perceived hidden goals underlying the overhaul.

Large-scale mobilisation

Ministry for Finance staff - 30% of whom are unionised, which is an exceptionally high percentage by French standards - have used strike action throughout the reform process and thus brought a great deal of pressure to bear. No fewer than four widely-followed (by around 40% of the workforce) strikes took place in 1999 (on 28 January, 16 March, 26 November, 17 December). The industrial action that took place after the Minister announced the reform measures in January 2000 was even more widely supported: three strikes were called jointly on 20 and 27 January and 3 February by unions represented at the Ministry. Each was supported by a high proportion of civil servants - over 60% at the Department of Public Accounting and between a third and a half at the Department of Revenue. Since early January, unions have also adopted a policy of inter-regional rallies and strike action in decentralised services.

Trade union representation at the Ministry for Economy and Finance is divided between seven union federations. CGT-FO has most support at the Treasury, while the Democratic Federation of Independent Unitary Unions, (Fédération démocratique des syndicats unitaires, autonomes, FDSU) is especially strong at the Department of Revenue. Together with CGT and CFDT, CGT-FO and FDSU garner 90% of the votes at Ministry-level workforce elections of representatives. The remaining 10% is divided among CFTC, CFE-CGC and UNSA. There are policy differences between the unions but, in a rather rare situation for the French trade union movement, these differences are traditionally managed by joint understanding

The unions do not challenge the principle of the reform of the Ministry and the need to improve relations with tax-payers. However, all unions have denounced what they consider to be a travesty of negotiation. They have had numerous meetings with Mission 2003 officials, ministerial advisers and Ministers themselves, but they felt that these talks were more akin to communication exercises than to actual negotiation. The unions maintain that Ministry staff are driven by genuine concerns, the first of which relates to jobs. Although the aim of cutting the number of civil servants has never officially been spelled out, unions are convinced that this is on the cards. They are criticising the Minister for failing to include serious accompanying social provisions in the reforms and for ignoring issues of training, qualifications and career path reform made necessary by the overhaul of the Ministry. The unions consider the reform schedule to be unrealistic, in particular in the light of technical problems said to be underestimated in both the Mission 2003 report and the measures announced by the Minister in January.

Commentary

There is a danger that bureaucratic implementation will transform a good idea into a bad one. Despite a heavy union presence, negotiations at the Ministry for Finance rarely go beyond managing details. The fact that the Ministry firmly clings to state prerogatives may genuinely compromise a badly needed reform process. There is room for an overall agreement to be negotiated with the unions. Some of them even admit that if the taxation system could provide a better service, with less civil servants, it would then be quite warranted to channel civil servants to other areas. However, financial logic, which ultimately determines the pace of reform, jeopardises it altogether: seeking job cuts within the framework of a reform process is especially counter-productive in a sector which is traditionally very sensitive to staffing issues. The open-ended nature of the government's intentions in relation to the taxation system, in addition to a generally very down-beat approach to taxation, will not help to win the support of civil servants, who have evidently been placed on the defensive. (Jean-Marie Pernot, IRES)