Employees respond to privatisation moves at EDF and GDF

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In summer 2002, the French government announced that the state-owned electricity and gas utilities, EDF and GDF, are to have their status changed, in advance of opening up their capital to private investors. In October, EDF and GDF employees turned out in force at a rally called by trade unions to defend the workers' current status and pension scheme. The terms for the privatisation of EDF and GDF and the approach to the thorny issue of the industry’s specific pension scheme are to be set out by the government in early 2003.

Changing the status of France's state-owned electricity and gas utilities - Electricité de France (EDF) and Gaz de France (EDF) - is one of the first industrial issues to be tackled by the new conservative government and will undoubtedly be one of the most difficult measures to be undertaken during the current parliament. The substance of the changes, which was referred to on several different occasions early in the summer by the Prime Minister and then by the President of the Republic in his 2002 Bastille Day television address to the nation, was fleshed out over the following days by the junior Industry Minister, Nicole Fontaine.

The government aims to table a bill in early 2003 to amend the status of both companies, which are currently 'state-owned industrial and commercial entities' (Etablissements publics à caractère industriel et commercial, EPICs). They are to become limited companies (sociétés anonymes), as a preliminary step to their capital being thrown open to private investors. This step is deemed necessary under the European Union deregulation process for the sectors concerned. This reform highlights the issue of the future of state-run companies in France and also of their specific pension schemes. These are two major issues on which the trade unions intend to initiate debate, in an attempt to ensure both the continuation of 'French-style' public services and of existing employee social benefits. It was against this background that EDF and GDF trade unions issued a 'call to arms' resulting in a 60,000-strong demonstration held on 3 October 2002 in Paris.

EDF-GDF and the opening of the EU energy market

Minister Fontaine’s statements suggest that the French government views the creation of an EU-wide energy market as necessitating a change in the legal status of the two French utilities, in order to provide them with 'the tools to implement an industrial strategy'. Indeed, in the wake of recent European Council decisions on the European energy market, a further step has been taken towards deregulation, especially in the light of the decision made in March 2002 at the Barcelona summit to open up the European gas and electricity market to competition, with the exception of the household sector (which represents one third of the total market). It is also a question for the French government of helping French utilities adjust to the new competitive environment and expand into international markets. Both EDF and GDF are currently hampered in their foreign acquisitions because they cannot seek private funding.

To rectify this situation, EDF and GDF's legal status will be amended to bring it 'as close as possible to that of private companies'. In early 2003, the whole process will get under way with the drawing up of a social plan addressing pension schemes and the status of current and newly-hired employees at the two utilities (EDF and GDF workers are currently state employees). The two companies will then see their capital opened to private investors in successive stages. No clear schedule has been laid down for this partial privatisation. The process will, according to the government, be underpinned by 'two requirements: social dialogue and the preservation of the concept of public service'.

Future of EDF and GDF's specific pension schemes

The government’s stated resolve to consult with trade unions on its reform of EDF and GDF is all the more understandable since the change in status of the utilities will first require the thorny issue of the reform of employees' status and of the company-specific pension scheme to be dealt with. This initiative is both a complex and a huge undertaking, since it affects some 138,000 employees and 150,000 retirees.

Currently, all funding for the electicity and gas industry special pensions scheme (Régime spécial de retraites des Industries Electriques et Gazières, IEG) is provided by gas and electricity industry companies and their employees. Total annual funding will stand at EUR 2.6 billion in 2002, 79% of which is provided by EDF. By 2020, based on an ageing workforce, this figure is set to rise to EUR 4 billion. By 2020 or 2025, the sector as a whole will be facing pension costs in the region of EUR 55 billion. The approach to change currently being advocated by EDF chair, François Roussely, is to attach the IEG scheme to the general state pension scheme. Under this proposal, the two utilities would pay a cash adjustment to the state, as France Telecom did a few years ago.

In addition to holding talks on the pension scheme issue, the social partners will be required to reach agreement on reorganising the qualifications and pay structure at EDF and GDF. Aware of the danger of sparking a repeat performance of the major industrial action in the state-run sector experienced in December 1995, the government is endeavouring to set up a consultation process.

Show of force by trade unions

The electricity and gas sector federations of the five main trade union confederations - the French Democratic Confederation of Labour (Confédération française démocratique du travail, CFDT), the French Confederation of Professional and Managerial Staff-General Confederation of Professional and Managerial Staff (Confédération française de l'encadrement-Confédération générale des cadres, CFE-CGC), the French Christian Workers' Confederation (Confédération française des travailleurs chrétiens, CFTC), the General Confederation of Labour (Confédération générale du travail, CGT) and the General Confederation of Labour-Force ouvrière (Confédération générale du travail-Force ouvrière, CGT-FO) - have attacked the government’s decision to 'jeopardise public utilities'. In July 2002, the unions launched a call for a national joint trade union demonstration by gas and electricity sector employees in defence of public services and of their existing legal status and specific pension system. The resulting demonstration on 3 October was well supported by workers.

The trade unions have raised the spectre of 'major dangers looming over the future of EDF and GDF' and have stated that they have never been 'more determined to take action' to 'safeguard quality public services for all, to ensure that current and future employees retain their status as state employees and to guarantee the survival of the pension scheme'.

Apart from this joint demand, the trade unions’ positions differ considerably. Following the violent reaction from CGT-FO, which accused the Prime Minister of having 'declared war on EDF and GDF employees', and from Solidarity, Unity, Democracy (Solidaire, Unitaire, Démocratique, SUD), which attacked him for 'potentially destabilising and weakening public services', reaction from CGT and CFDT was relatively moderate. Both trade unions, which have majority support in both companies (FR0012110N), have noted the government’s decision and intend to remain vigilant, especially in relation to the social aspects of the issue. However, both unions have identified different priorities in terms of procedure and goals. CGT has suggested that a 'national referendum' and a 'genuine evaluation of past deregulation and privatisation processes be carried out before any decision is made'. CFDT is championing the setting up of a 'specification list' defining the public service mission of both companies. This list would apply to all present or future energy sector companies operating in France.

Commentary

In the wake of the 3 October 2002 rally in Paris, considered by many as the start of the new 'industrial action season' and attended by delegations from other state-run companies and left-wing politicians, trade unions have now switched to wait-and-see mode. CGT-FO declared that 'the strong turn-out by EDF and GDF employees was intended to express their commitment to public services. It now remains to be seen whether the government has finally got the message.' Initial reaction from the latter, with the Prime Minister almost expressing satisfaction at the success of the rally and saying he 'shared the message' it sent, was somewhat disconcerting. In an attempt to pour oil on troubled waters, the government has been keen to reassure employees in state-owned companies with a view to avoiding a conflict focused on the prickly issue of pensions. As a result, it has given an undertaking to 'ensure the survival of the EDF and GDF pension schemes and to seek any funding guarantees that might be necessary'. The question now is the detailed measures that the government intends to put forward to amend the status of EDF and GDF and to address the social issues arising from this change. (Marie Raveyre, IRES)