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Business, Financials
February 23, 2010

Transport strikes lay bare Europe’s malaise

PARIS, France

WITH economic recovery barely there and talk of austerity spreading, many European workers are pushing back.

French air traffic controllers walked off the job yesterday just as Lufthansa pilots ended a strike and British Airways cabin crews voted to launch one of their own. Greek unions prepared to shut down much of their country Wednesday with wide-ranging strikes.

These workers — like those who blockaded the Athens stock market or demonstrators angry at proposed delayed retirements in Spain — fear for their hard-earned comforts as European governments and companies tighten belts to stay solvent.

The walkouts are the latest signs of a broader unease about jobs and benefits, and what the future holds for a continent struggling to stay competitive on a global scale.

The anxiety cuts across both private and public sectors, economist say.

Governments that took on higher debts to get through the financial crisis or didn’t prepare adequately for a downturn now are looking to cut costs.

“Stimulus programs have largely driven the economic rebound over the last 20 months,” said macroeconomist Frederic Bonnevay in Paris. “Now as this public support stabilises and is progressively removed, the outlook suddenly appears grim.”

As for the private sector, industries like the air transport sector tried to spread out cost-cuts to ease the harmful effects of the downturn, but now must carry out the reforms, economists said.

“The crisis is playing a role in all this, because it’s hit sectors in which investment isn’t resuming — and that puts pressure on jobs,” said Jean-Francois Jamet, an economist with the Fondation Robert Schuman in Paris.

“The air sector is going through a general restructuring,” he added. “Companies must face the consequences of the crisis, and are paying for bad financial results that they have had since 2008.”

Looming elections in France and Britain over the next few months have also given labour groups the chance to wrest concessions from politicians seeking re-election, Jamet said.

Air traffic controllers walked off the job across France as a four-day strike began on yesterday, testing the patience of would-be travellers and forcing the cancellation of hundreds of flights.

Unions called the walkout to protest plans to integrate European air traffic control across six countries — which workers fear will lead to losses of jobs and civil servant benefits.

Workers and unions say they are digging in to protect the European social safety net from fraying and to keep austerity measures from sapping consumer demand and thus the economy.

With unemployment in the 16-country euro zone at 10 per cent, and Spain the top laggard with unemployment at 19 per cent — concerns about job security are paramount.

“The dangers of pricing oneself out of a job have nowhere been more apparent than they are today,” said Howard Wheeldon, a senior strategist at inter-dealer broker BGC Partners in London.

“The solution is … for companies to be even more efficient and that of necessity means employing fewer staff,” said Wheeldon. That’s what managers at British Airways and Lufthansa are facing, he said.

Thousands of Lufthansa pilots resumed work yesterday after suspending a strike over concerns that cheaper crews from the German carrier’s smaller airlines in other countries could replace them one day. Big European carriers have been pummelled in recent years by high jet-fuel prices, competition from low-cost rivals and falling demand for first- and business-class tickets — where profit margins are higher.

“Cost pressure has always governed airlines,” said Per-Ola Hellgren, an analyst at Germany’s Landesbank Baden-Wuerttemberg. “The pressure is much greater than in the past. The conditions were never really great and now they’re worse than ever.”

While airline workers face market pressures, the air traffic controllers are subject to a government push for efficiencies at a time of high state deficits and lackluster economic conditions.

Eric Heraud, a spokesman for the French state-run civil aviation agency DGAC, suggested the controllers are acting out of fear.

“This strike is a little bit disproportionate,” because the French government is committed to keeping workplace protections, he said. Heraud said labor unions representing controllers in the five partner nations — Belgium, Germany, Luxembourg, the Netherlands and Switzerland — all supported the integration plan.

The malaise about pending government cutbacks and efficiency-seeking extends beyond the air travel sector.

In Spain, labour unions have called protest rallies for yesterday evening in Madrid, Barcelona, Valencia and other cities to protest a government plan to raise the retirement age from 65 to 67 age as part of an austerity package.

Greek unions are calling a wide-ranging strike for Wednesday to protest austerity measures aimed at getting the country out of a government debt crisis. The action is expected to ground flights, reduce medical service and close schools and government offices, while some private sector unions will also stay off work.

Transportation labour unions in the Czech Republic decided yesterday to hold a strike in Prague next Monday to protest a new value-added tax on their workers’ benefits.

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