SCENARIOS: Could French fuel strikes derail pension bill?

PARIS (BestGrowthStock) – Trade unions opposing pension reform are stepping up action ahead of a Senate vote on Wednesday, with refinery protests causing shortages at petrol stations and roads congested by truckers’ go-slows.

Another nationwide day of protest marches is planned for Tuesday, along with strikes by airport employees and staff at least one nuclear power plant. Airport workers are threatening action on Wednesday as well that could ground dozens of flights.

Following are some scenarios of how the situation could unfold:

UNIONS DIG IN, FORCING GOVERNMENT TO TAP EMERGENCY STOCKS

A shortage of fuel has become the government’s most pressing concern since workers at the country’s 12 refineries walked out last Tuesday in sympathy with transport workers protesting the pension bill. Some fuel depots have also been blocked, although police intervened to clear access at a number of them.

The question is how far the government would be willing to tap into its emergency reserves in the days ahead, and how long striking refinery workers will be willing to keep losing pay.

The refinery strikes have come on top of an unrelated three-week strike at France’s biggest oil port, Fos-Lavera near Marseille, which had already reduced crude supply at refineries in the southwest and depleted nearby fuel depots.

The UFIP oil industry lobby has warned that shortages will start to be felt from mid-week. On Monday, more than 500 petrol stations around France were suffering fuel shortages, and many drivers queuing for petrol or diesel said they had tried several stations in vain to fill up their cars.

As of Friday, France had 98 days of so-called strategic oil and fuel reserves, most of it held by the government but 30 days’ worth held by industry and all of it stored in 120 depots across France. An International Energy Agency (IEA) official told Reuters France was already tapping the industry stocks.

The government has not touched strategic fuel reserves since Hurricane Katrina disrupted global supply in 2005, but if it opts to do so it can go ahead without requiring IEA permission given this is a domestic supply problem.

Opening up those strategic reserves might mean that it has to deploy police or even the army as guards to prevent protesters blocking the depots, a move that could alarm international observers and risk clashes.

UNIONS STEP BACK, RETURN TO TRANSPORT STRIKE

Unions may decide their negotiating position would be stronger if they scale back their action to strikes in the transport sector which disrupt daily life without the risk involved with police breaking up blockades or detaining protesters.

Rail workers continued their week-long open-ended strike on Monday. Airport employees and staff at least one nuclear power plant are expected to join them in a nationwide day of strike action on Tuesday, in parallel with protest marches.

Union leaders will sit down this week — after a Senate vote due on Wednesday, but which could be delayed until Friday — to decide what to do next.

Striking workers lose a day’s pay for each day they are off work, and some say they cannot afford to stay away much longer.

Unions may also back down if they sense public opinion turning against them. Past polls have shown that most French people back the strikes but serious travel disruption could change that.

On the other hand, the unions will be reluctant to show they have lost clout since 1995 when 24 days of strikes crushed an attempt then to overhaul the pension system. Street protests also forced a government climb-down on a labor reform in 2006.

So far, union leaders have vowed to maintain their protest even if the Senate passes the bill. What will be crucial is in what sectors they keep up strikes and how big turnout is.

Freight drivers were called to join the action on Sunday evening, but so far their actions have been limited to driving delivery vans slowly on motorways. Were they to start blocking off roads with big trucks or hampering access to warehouses, that would ramp up the pressure on the government.

The big question there is the extent to which the national union confederations can control more radical union action at sectoral or regional level.

GOVERNMENT OFFERS CONCESSIONS TO UNIONS

Sarkozy, facing the biggest test of his presidency, could step in and offer some kind of concession to oil sector employees to stop the refinery strikes tarnishing his flagship reform. He enjoys in any case a comfortable majority in parliament.

He set a precedent by intervening in a February strike at Total’s oil refineries to push the oil major to reach a settlement with workers, but may find it harder to do so given the national issue behind the current strikes.

Sarkozy might also defuse the strikes by making a promise to trade unions to include them in talks after the pension reform is passed to look at where the government could make tax changes to appease people who feel they are being unfairly punished for a breakdown in the system.

Sarkozy has already made a small concession in his pension bill to women near retirement age who gave up work to bring up three or more children and has said his government will look at removing a tax shield that limits taxes on the wealthy.

The problem with concessions on tax is that they may seem remote for people compared to a pension reform bill passing through parliament right now.

(Writing by Catherine Bremer)

SCENARIOS: Could French fuel strikes derail pension bill?