Scandal sheds light on secret business-union links

16th October 2007, Comments 0 comments

15 October 2007, PARIS (AFP) - A cash scandal at the employer's federation MEDEF threatened a major upheaval of France's system of industrial relations Tuesday, as evidence strengthened that for years businesses have been secretly funding their trade union adversaries.

15 October 2007

PARIS (AFP) - A cash scandal at the employer's federation MEDEF threatened a major upheaval of France's system of industrial relations Tuesday, as evidence strengthened that for years businesses have been secretly funding their trade union adversaries.

Denis Gautier-Sauvagnac, head of the powerful Metal Industries Federation (UIMM), is under police investigation after it was revealed earlier this month that some 17 million euros (24 million dollars) had been withdrawn in cash from UIMM accounts since 2000.

If there is no suggestion of personal enrichment in the affair, instead investigators believe they have stumbled on hidden "war-funds" used by the UIMM to subsidise trade unions and "buy" agreements to end industrial disputes.

According to Gautier-Sauvagnac, the money was used to "oil social relations" -- though he has refused to disclose the destination of the withdrawals. His predecessor in the job Daniel Dewavrin said the practice had existed for years, and the sums involved "used to be much greater".

Union leaders denied taking money from the UIMM. But speaking on condition of anonymity, union and business leaders admitted to Le Parisien newspaper that a system of under-the-table money transfers has often suited both sides' interests.

The scandal has come as a severe embarrassment for both the MEDEF and the trade unions, some of whom are poised for a day of strikes against the government of Nicolas Sarkozy on Thursday.

However it also serves as a useful argument for reformers who want to open up the cosy union-business partnership -- known as "le paritarisme" or co-management -- that has governed French industrial relations since after World War II.

Laurence Parisot, the head of MEDEF and a rival of Gautier-Sauvagnac, said Tuesday that the scandal had laid bare a "a certain conception of social relations that is totally out of date.

"This scandal and the revelations that come with it have been like the opening up of a family secret ... We are in fact liberated. A new life can start. Some say it is a crisis. I say it is more a convulsion from which something new can be born," she said.

Many union leaders have also spoken of the need for a new system of financing -- something which Sarkozy has himself raised as part of a planned overhaul of state structures.

For French trade unions, the problem of funding is acute because of the low level of membership and subscriptions. Only five percent of private sector employees are unionised in France, and 15 percent in the public sector.

Much union income comes from government subsidies, and payments for work on co-management bodies such as the unemployment and pension funds. Protected by a 19th century law, most unions do not publish their accounts -- giving rise to regular corruption rumours.

The business daily Les Echos said it was time for both the MEDEF and trade unions to say goodbye to a system whose origins lies in the need for national consensus in the unstable post-war world.

"How could an organisation as public as the UIMM believe that it could keep withdrawing large sums of cash and handing them out to unions and other recipients? How did it think no one would ever know?

"A major revison of the funding and transparency of the employers' and workers' organisations is now an absolute priority," it said.

AFP

Subject: French news

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