Protests over plans to change status of EDF and GDF

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In May 2004, the French government submitted a bill to parliament that would alter the legal status of the state-owned electricity and gas companies, EDF and GDF. Trade unions are critical of the proposals, or oppose them, and most are demanding the bill’s withdrawal. The unions organised a series of protest actions during May and June.

For several years, France's state-owned monopoly companies have been under serious pressure from EU institutions and Member States and from their competitors to open up the French market to competition. In keeping with EU regulations, the French companies concerned, using a variety of methods, have been undergoing a gradual change in their legal status and/or are opening up their markets to competition. The state-owned La Poste postal services group, for example, is now in the middle of this sensitive phase (FR0405105F).

For several years, the management of the companies concerned and successive French governments have delayed reforming another sector that epitomises the French tradition of state intervention in the economy in key sectors through state-run monopolies; the electricity and gas industries. However, during the second quarter of 2002, the government flagged up its intention of introducing a bill in early 2003 that would change the status of the state-run companies Electricité de France (EDF) and Gaz de France (GDF) to one that would be as close as possible to that of companies under private law. The aim, according to the government, was that they could carry out their 'industrial projects' and make all the investments they deemed necessary. This change of status was to be accompanied by a plan regulate the status of current and future staff, and what would happen to the two companies’ special pension scheme (FR0210105F).

On 9 January 2003, employees rejected a draft agreement on the reform of the EDF-GDF pension scheme prepared by the employers and four trade unions, 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) and the General Confederation of Labour (Confédération générale du travail, CGT). This dealt the government’s plans a major blow (FR0302109F). Moreover, the latest workplace elections of employee representatives at EDF and GDF in November 2003 showed increases support for the unions opposed to a change of status, which they view as tantamount to privatisation (FR0401101N).

Government’s bill

Eventually, on 19 May 2004, the cabinet discussed a bill on the electricity and gas public utilities and the companies providing these services. Parliamentary debate on this bill was to begin on 15 June 2004, with its passage planned for later in the summer. This bill seeks to incorporates several EU Directives into French law, particularly Directives 2003/54/EC on common rules for the internal market in electricity and 2003/55/EC on common rules for the internal market in natural gas. It would also allow EDF and GDF to change their current status as state-run companies into that of limited companies (sociétés anonymes, SAs). Lastly, it sets out the planned reform of the EDF and GDF pension scheme by absorbing it into the general scheme.

Time is short. The opening up to competition in around 70% of the French electricity and gas markets will be effective as of 1 July 2004, and the current state-owned EDF and GDF have serious financial requirements. EDF’s debt stands at EUR 25 billion and the current management wants to increase the company’s equity by EUR 10 billion to EUR 15 billion.

Union strategies and bargaining

The unions at EDF and GDF, with the notable exception of CFE-CGC, began mobilisation in opposition to the government's plans in April-May 2004. This consisted of an demonstration in Paris on 27 May 2004, a 'no tolls on motorways' operation on 3 June, and sizeable participation in broader demonstrations against the government's reform of the sickness insurance scheme on 5 June (FR0406105F). A day of strike action was also planned by most of the industry’s unions with representative status for 15 June, to coincide with the beginning of parliamentary debate on the bill, before more demonstrations related to future developments. Certain actions, particularly by CGT activists, have been strongly criticised, such as unexpected power cuts, including some affecting hospitals and the rail network, and the dismantling of an electricity meter serving the home of an MP in favour of privatisation.

Meanwhile, bargaining has been under way. The Minister of the Economy, Finance and Industry, Nicolas Sarkozy, met all the industry’s unions on 7 June, and discussions have basically centred on three points:

  • the level below which the state would not allow its stake in the capital of the two future limited companies to fall;
  • the amount of new funds to be invested by the state into the capital of EDF and GDF; and
  • staffing levels in the new companies and the status of their employees.

On the first point, in the initial bill to be placed before parliament, the state was to keep a 50% stake in the capital of the two companies. This proportion was subsequently raised to 70%. In terms of the injection of new capital, it is now planned that the state should reserve around EUR 500 million of the income derived from flotation specifically for recapitalisation. Lastly, the status of employees currently in employment is not to be changed.

The strategies chosen by the various unions differ. CFE-CGC is not demanding the bill’s withdrawal but intends to help improve it. The Solidarity, Unity, Democracy (Solidaires unitaires, démocratiques, SUD) union plans to continue the mobilisation campaign after 15 June. The General Confederation of Labour-Force Ouvrière (Confédération générale du travail-Force Ouvrière, CGT-FO), is also urging repeated strike action after that of 15 June. CGT, by far the best supported union in the industry, is seeking not to be 'out-bid' by unions that have more recently emerged and which are attempting to win support through radical practices and discourse (ie SUD) and, at the same time, it wants to take part in all the stages of the official or unofficial discussion and negotiating process. CFDT has been critical of CGT’s action and claims that CGT wants to link the campaign against the change of status of EDF and GDF with that focused on the planned reform of sickness insurance.

Flotation postponed?

Faced with the prospect of a considerable mobilisation by staff at EDF and GDF, and a generally difficult political situation for the government, Minister Sarkozy is reportedly thinking of delaying flotation for a year once the principle of changing the two companies’ legal status into that of limited companies has been agreed. CGT has already rejected this proposal (see the Le Figaro newspaper, 14 June 2004).

Commentary

Postponed several times, the change of status for the state-run electricity and gas companies is now on the parliamentary agenda. In addition to their different levels of opposition to the change of status for the companies, differences between the strategies of the various trade unions may appear in the future. The government and the management of both companies will probably be tempted to take advantage of these rivalries and differences, while CGT, apparently very active in the mobilisation of the industry’s employees, is basically on the defensive, fearing first the loss of its historically dominant position in these companies and second the legal challenge to its management of the joint EDF-GDF Central Fund for Social Activities (Caisse centrale d’activités sociales, CCAS). (Maurice Braud, IRES)

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