JPRS ID: 10589 WEST EUROPE REPORT

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• Collection: JPRS
• Document Number (FOIA) /ESDN (CREST): CIA-RDP82-00850R000500070035-1
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• Content Type: REPORTS

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JPRS L/ 10589
- 16 June 1982 .
. W~st Eurd e Re ort
p p
, CFOUO 38/S2)
FBIS FOREIGN BROA6CAST INFORMATION SERViC~
FOit OF~ICIAL USE ONE.Y ~ ~
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JpRS L/10589
16 June 1982
- WEST EUROPE REPORT ~
(~'OUO 38/821
CONTENTS '
ECON~'IIC
- FRANCE
~ Rising Imports, Competition, kquip~nent Create Problerna in
Textile Industry ~
(Z~FXPRESS, 26 Mar-1 Apr 62) 1
. Effects of Inflation, Reduced Consumption
Distribution, Marketing Affect Competitiveness
Research, Innovation Efforts
' Government Uncertain on How To Finance Retirement at 60
- (I,~ERPRESS, 9-15 Agr 82) 10 ~
ITALY
Ciampi~s Report on FYnancial Problems of Industrial Sector
~ (Guido aentili; iz sozEa4 oxE, 25 Apr 82) . 13
POLITICAL
FEDERAL REPUBLIC OF GERMANY
Impli~:ations of Rise of Qreen Party Ex~m~ned
(Sebastiarb Knauer; STERN, 6 Mqy 82) 22
Deng~rs From Cantonal Elections for Mitterrand, Policies
- (Arthur Conte; PARZS MATCH, 9 Apr 82) 27
,
- - a - (III ~ WE - 1:i0 FOUO)
F~1R ~1FF~f T~ i T 1.4F. (1TV1.V
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SPAIN
Opinion Poll Confirms UCD Slide, PSOE Gains ~
~ (CANIDIO 16, 26 Apr 82) 32
. MILITAFtY
~NTERNATIONAI~ AFFAIRS ~
~ Bri ef s
- Anti-Helicopter Mtssile 39
FRANCL
Transall, Mirage F-1's Carry Out Delivery, F1~eling ESCercise
(AIR ET COSMOS, 15 May 62} Lt0
Briefs
Reconnaissance Missile in Autwrm 42
-b-
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- ECON~IIC FRANCE
r. .
RISING IMI.'ORTS, COMPETITION, EQUIPI~TT CREATE PROBLEMS IN TEXTIL~ INDUSTRY
Effects of Inflation, Reduced Consumption
Paris L'EXPRESS in French 26 Mar-1 Apr 82 pp 97-100
[Text] Say the word textiles and imu~ediately faces
fall. Crisis, layoffs, ~antcruptcy fil.ing~a, endemic
~rop in consumption~ products too expensive, loss of
foreign marketa, runaway imports--this ifi the litany of
complaints. It's no use telling oneself that this sector
of the economy represents one out of every 10 ~obs in
~ industry, ~:hat we invest twice as much awney in it as
in automobiles, that it is esaential and irreplaceable;
~ who still wants to invest in textiles? Bankers are
flee~ng; the aaministration ie not ent:~usiastic. They
support this industry because it is ne~essary to do so
(550,000 ~obs do count), but dream of all that they could
do with this money for high technology, the sectors of
the future, i~ a word for important m~tters. The
textile iz~dustry is not serious. It :Ls frills, fashion,
a plaything for housewives. A woman buying a dreas
doean't care if she knows where it was made, she wants
to know if it suits her and haw much it costs. A man
acts the same way about his outfit. A consumer is not
investing in textiles: he is buying.,
� Sa, is this the end of the French text ile industry? Well,
_ no, it ia hanging onl ~
Just yesterday~ the Frencli textile industry tiad the rosy cheeks and bright
eye~ of good h~ealth. No doubt it too. has itf? higtr.s and lows. Who doesn't?
Its great experience and its apirit sv~r spar,kl ing with new ideas enable it
to overcome cyclical crises every time. It even finda in them another
reason. to tieve confidenc' in the future: it has been in worse sftuatians.
_ For, the textile industry is parf: af tlistory,~ It is one o� the oldest ~
activities in the world. The Jacquard Zoom I~resided over t.~e birth of the
industrial age wttich haci not yet taken on clire~tion when t:!~z Lyona silk
. weavers had the opportunity to show the worlil ~ahat the proletariat was ~uade
of. The less advanced countries~are followit~g the example: almost all of
them want ta achieve ir.dustrial development t:hrnugh the textile industry.
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But, this time the warning seems more pressing. The French are using fewer
' textile art icles, imports are increasing, and sxports are decreasing. You
don't have to be a genius to estimate the extent of the effects of this
~ triple pronged clamp on the activity, employment, and even the future of
the sector.
~ "Do we want a textile industry in France or not? Let them tell us!" How
manq times has the trade posed this question in reply to those who,
_ frightenPd b,y the announcements of layoffs, bankruptcy filings, company
closings, have asked them: "But, whq? Why this sudden collapse?" As if
the future of the textile industry depended on some external power which,
facing the fallen fighter, would have the power to turn his thumbs down or
to grant mercy.
Ti~e textile industry's future is actually tremendous. Each year the French
spend Fr 12 0 billion on textile articles, t~ao times as much as on cars:
it is therefore difficult to consider this a minor activity. Production
alone employs ha~l a million people, des~ite the toll of the past few
years. These days, the argua~ent carries weight. Add distribution and the
80,000 sales outlets, and it is not out of line to consid~r that 3 millinn
French people are directly in.vfllved in this activity.
Cu t Of f~ On,e Head ~
Th~.s would be ~ore than enough to bet on a long life ahead for the textile
industry. ~eeides, there is not ~ust one textile industry, there are
textile in~'ustries. Cut off one head, and two more will grow in its.place.
A manufacturer of upholstery fabric, a~eans cutter, and s knit sweat~r
manufactuxer have noth;ng in co~aon. Neither do a women's ready to wea~
retailer and or~e who specializes xn men's or children's clothing. These
are diff~rent prafeasions with diff erent production cycles an3 dietribution
channels. Their interests and outlooks are dirferent, even opposing. The
� market s~metimes promotes these rivalries: for example, when textiles for
the homes are doinb well, clothing sales are generally down.
And, first oa all, textile.s and clothing must be differentiated. One is
a supplier to the other, as the steel industry is a supplier to the automobile
lndustry. Consequently, they ar~ unaware of each other, although clothing
represents 51 percent of the textile market. ApprQximatel,y 33 percent of
this market is domestic articles. The rest is primarily absorbed by
technical and industrial applications.
~1 Past the textile stage, th~~re is a second distinction between per.sonal
apparel and housewares. Du~ing the g~od years, in other words from 1965
to 1975 whera ready to wear experienced its boom, the expa.nsion of the
industry and of clotliing distribution occurred in a disorderly fashf.on.
The needs to be f illed were great . ~'rench societ~~ was f inally gaining
access to the delights of mass tnark,eting. These circumstances always favor
both inventive spirit and resourcefulness, and consequently a certain amount
of ct?aos. Mushroo~nir~g companies made a fortune in a few sessons. Stores
multiplied. A return to or,der inev irably had to occur.
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This happened when the rate of growth of consumption slowed down. The
turningpoint was the year 1973: from approximately 5 percent growth in
volume per year since 1960, growth in coneumption abruptly fell to zero.
Should the first oil crisis be blamed? It wae indeed at this time that
growth in household purchasing power gave way. Aouseholds had to make ,
decisions on their expenditures: clotliing was sacrificed first. The
holding bakc on purchases was even more severe since prices had climbed
greatly. At the same time, the great postwar population boom came to an
end. It didn't take anything else to cause an adjustment of supply in
the industry as well as in distribution.
Men's clothing f elt it first. A man, less affected by fashion and compelled ~
to make more expensive purchases, reduces his clothing expendituxes more
quickly than a woman. It was therefore men's ready to wear that consolidated
itself first. Large groups were formed: Bidermann, Weil-Besancon, Vestra,
are ~eaders in this sector today. A similar but less extensive movement
took shape in thE women's ready to wear industry. Many storea closed, but
more still opened.
A Little Balm fo~ Wounded Hearts
- The true cri~is only occurred in 1979 when consumption, no longer content
to stagnate, began to dr~p. A single point of decline in a sector that
has a sales voluem of around Fr 100 billion, is Fr 1 billion vanishing.
i,s a great number of boutiques have an annual sales volume of lese than
F'r 1 million, and as it is these small stores which are moat immediately
affected, he~e you have the equivalent of the business of more than 1
~houssnd boutiques wiped out in a single stroke.
In 1980, the awful year, the drop in consumption hit 3 percent overall,
and 10 percent in certain sectors such as men's clothing, and even 18
- percent in the netting industry. An appreGiable r~:.overy was noted last
year: 1981 registered a growth of 3 percent, which has already been balm
to the trade's wounded ~earts, without however enabling theni ro regain
1978 levels. ~
Clothing sales will probably never again be what they were. For, during
the cirsis the consumer picked up new habits. First of al.l, it has been
known for a long time that households in dev~eloped countr:'Les are alloting
- a smaller share of income to clothing~ because other opportunities to
spend have appeared, starting with leisure time activit~~s and transporta-
tion. Finally, and this is the new factor, because cons~amers have changed.
With the stagnat ion in income, the French have been led to favor separates,
skirts, sweaters, blouses, T-shirts, or Iittle inexpenF~ive dresses, at the
. exp~.~se of coats, ta~ilored suits and other large items which until recently
constituted the nornnal foundation of a wardrobe. Thi~3 trf~nd is particularly
true o� women, who can easily and inexpensively update or "acces9orize"
- an outfit by means of a few small detiails. But thie is also true of inen,
who are abandoning their classic outfit when soCia] conatraints allow.
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They have replacsd it with eportswear which, having conquered city streets,
is in the process of making its e~try in offices. The cost per item of
sports shirts or pants is still rightly less than that of traditional
clothing, although there is nothing to indicate that it will always be so.
The established trends in France are found in all the industrialized
countries. It is interesting to note the following paradox: the decrease
in purchasin~g power (therefore the search for lower cost articles) as well
- as the relative increase in income, make it less easy to confirm social
standing by means of dress (sociologists say "appearance"). ~onformity
is overthrown, you put yourself together, add color to the outfit using
accessories, and comfort is favored.
In terms of personnel, the decrease in consumption since 1973 has meant
a loss of 105,J00 ~obs in the textile industry where employment has thus
been reduced to 3~0,000 and of 60,000 ~oba in the garment {ndustry which
now has 250,000 employees.
A Painful Drain
This decrease has always been normal, since it is linked to improvements
in technology and productivity. After the war, the two sectors together
employed close to 1.2 million parsons. The period of reconstruction, then
_ ~ expansion, which followed enable3 this change in the industrial apparatus
to be absorbed with no ma~or problems. The drop in consumption aggravated
the phenomenon considerably due to dead losses in production. At the same
time, manufacturers were accelerating their productivity efforts to remain
or to become competitive again in the fr~ce of increasing imports. During
1980 alone, the clothing industry lost close to 22,000 jobs, an3 12,000
- more last year, or a 13 percent reduction in staff in 2 years.
Faced with such figures, one may be surprised that such a drain, occurring
in regions which often lack other industries, could take place without
large scale union reacti~n. Only local, and generally brief, conflicts
- marked the often signif icant mass layoffa and even permanent company
- closings. It is obvious that th~se things are not done painlessly. It is
also true that the a~paratus .for unemployment compensation, early retirement,
incentives for "voluntary" departure, and reclassification operated to
the fullest extent, and that the mass layoffs were always neti~tiated as
closely as possible. The point has been reached where layoffs are discussed
liek the purcha~e of a carpet, based ca deliberately inflated or reduced
~ figures with each of the parties, including factory inspection, knowing
exactly how many joba will have to end up being eliminated.
The fact remains that this apparent resignation on the part of the unions
- ts probably due to the natur~ of employment in the two sectors t~xeanaelvea.
- Fi.fty-five percent of the labor force in the textile industry is female,
! and 83 percent in the garment sector, where those who are under 25 comprise
' close to half of the personnel. In textiles, on the other hand, the average
- age is much higher and the layoffs then primarily affect the old~st
- personnel. Early retirements at 55, even at 53, are not uncommor~ here.
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Finally, the textile induatry, and particularly the garment industry, ie
made up of small, generally family buaineases., where tough union action
can hardly dsvelop. In fact, one of the characteristics of the garment
induetry (but this is also true of textiles) is its extremely splintered
structure, despite the consolidations brought about over the past few yeaYS.
- ~ Although reorganization of inen's ready to wear--the 3 leaders together do
?0 percent of this specialty's business--as well as of very specific
branches such a~ the manufacture of woolens where again 3 large companieB
(Lou{.P Lepoutre, Andre Roudiere, Paul and Jean Tiberghien) share Franc~'s
basi,c output, can be considerec~ complete, the same is not true'elsewhere.
Overall, there are 3,000 companies in the garment industry and a sales volume
- of Fr 26.5 billion, and only 60 of the companies employ more than 500 people.
The textile industry totals about 2,500 companies, about 100 of which
emplo~? more than 500 people, and it does Fr 65.5 billion of business.
Knitting ia included under textiles, although it produces f inished clothing
products: It includes 400 companies with a total sales volume of Fr 4
billion.
- So, there is no point in aaying that we have not heard the ~nd of
reorga~tization in these sectors.
COPYRIGHT: 1982 s.a. Groupe.~Express
- Distribution, Marketing Affect Competitiveness w
Paris L'EXPRESS in French 26 Mar-1 Apr 82 pp 100, 102
[Text] "The customs barriers are.unfair, the dollar is penalizing us, the
down and out in the Third World are unfair competition, the French iack
civic pride and are buying foreign." These are the complaints of French
textile manufacturers.
Germany, our neighbor and traditionally our number 1 customer, is re~ecting
our products. The United Statea should be a logical export market due to
its purchasing power and the common culture which links us.. Besides, the
. United States was captivated by French clothing to the goint of becoming
our number 3 foreign customer at one time. Today it pref ers to buy elae-
where. It is acting ~ust like the French consume; who�buys an Italian
sweater or a shirt from Taiwan without any hesftation.
If imports continue~to increase while our foreign markets crumble, it is
because our products are either not suitable or not competitive, or both.
One need only leave the country to note how French fashion retains its
aura. It is copied; the whole world rushes to Parie to visit the textile
, showrooms, to see the collections and the fashion shows. At leaet the
French textile industry has the advantage of having no other competitors
except the Italians as far as design is concerned. The proof: right now
American designers who are using Yves Saint Laurent's or Tl~ierry Mugler's
ideas from 5 years ago are very highly t~ought of.
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French fashion retains all of its appeal abroad as well as in the Chaussee-
d'Antin botiques. On the other hand, when it comes to buying its producte,
the prices cause hesitation. Abroad, the French cre~tions are limited to
the upper end of the range. In France, most consumers turn to imports in
one out of two cases.
Then where does the French m~nufacturer's handicap come from? 'Pheir plants
~ are no less well equipped than those of their competitors. They have the
same machines, and methods which are often more sophisticated as they are
heir to long experience. The labor force is just as qualified. They are
obviously paid more than in Asia or along the Medizarranean, but still
less than in Germany, Belgiwn, Great Britain, and even Italy.
"Wrong!" protests a choius of our manufacturers. "The real foreign
manufacturers ara experiencing the same d~ff iculties. We have an equal
chance against them, and we know how to fight. Only the unfair competition
is harming us and leaves us defenseless."
Could the "German" products entering France all be coming from Eastern
European countries via East Germany? Are the~e no hosiery factories in
Italy, and could Benetton be operating on the black market? No, of course
not.
i~i truth, the lack of competitiveness of French companies is due neither
to poorly suited products nor to lack of productivity. It is due to the
- nature of teh French market itself and, consequently, its distribution
' structure.
More than any other, the French market is subject to fashion. Only Italy
experiences this phenomenon to a comparable extent. In Germany, a woman
will ask her friend where she found her pretty dress and will go buy the
same one. Here, two women wearing the same dress to a dinner party will
ruin an evening. In France, as in Italy, business integration ran up
against this diversity, while in Germany and other European countries,
an organized distribution network was developing. This made possible
the initiation of a fruitful dialogue with the manufacturers who,
strengthened by many large orders, found themselves in a position to invest
and to reach a truly industrial level.
Acrobatics and Poker Hands
The French ready to wear manufacturers, on the contrary and like their
textile suppliers, f ound themselves faced with a splintered distr.ibution
network whose primary requirement remains to present articles which are
different than those off ered by the shop next door. This results in orders
for small lots which are expensive to assemble and which, when pl.aced one .
after the other, never make ~nything more than small runs.
This whole process is inflationary. The collections presented must be as
extensive as possible to get the largest number of votes; .fabric purchases
becomes poker hands. For producing fabric is a realativel,y heavy industry
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whose production costs are directly related Lo the quantities ordered and
- to prod*sction planning. Furthermore, its sales force must be pro~ortfonate
to the distribution network: it:represents 60 percent of the cost of the
finished product. For example, the increase in the price of gas was a
bad blow to the garment industry simply through the inr_rease in sales
representatives' travel exp~nses.
~ All these costs unite to make French clothing a luxury product compared
to an identical item designed and aold within a truly i:ldustrial context.
Ready to wear companies therefore remain small and middle size enterptises,
generally family business which put themselves through acrobatics every
season to make deliveries on schedule. The consequences: little improv~-
ment in productivity, litt~e investment, lack of capital, a marketing
strategy based primarily on instinct and experience--and no international
outlook at all. ~
It is a miracle so far that an industry worthy of the name has been able
to develop in France within this context. It was forged slowly during
the expansion period, and then more rapidly when the crisis came, with
the stronger ones then picking up the pieces from those who succumbed.
Dis-ribution, by beginning to structure itself too, hel~,ed the movement.
However, even among the laders, small runs continue to plague production
equipment. In f act, the French manufactureres fin~ themselves sidlined
and compelled to produce wt~.at the others don't want to make--in a defenaive
position, theref ore.
The first temptation then is for each one to place himself further on the
fringes, to t;ecome unbeatable in his small area of specialization. You
raise your range, update collections more often to outdistance the
competition, and offer a flexibility which is not available to foreign
manufacturers who are too far from the market or whose plants are too
rigidly set up. This policy may appear logical and even astute. It only
~ results'in higher prices.
The second temptation is to increase the number of specialties to reach
a sufficient siz~e. It has often led to dangerous and disastrous diversi-
ficatioa. There have also been successes. They have been achieved by
�those who knew how to find a common denominator among their specialties,
or to create a large potential for distribution by establishing a trademark
, or foreign markets. In both cases, success preaupposes having the means,
because launching a trademark and an export policy require heavy investments.
In both cases, inflation is still winning.
COPYRIGHT: 1982 s.a. Groupe Express
Reaearch, Innovation Efforts
Paris L'EXPRESS in French 26 Mar-1 Apr 82 p 114
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['I'ext] Faced with the extent of the effect~ of the crisis on the textile
- and garment industries, particularly on employment, it was indeed necessary
to decide to study the question more closely. Never have these two sectors
benefited from such great coiicern. In less than 1 year, three large reports
ha�ve summed up the situation, analyzed the problems and found solutions.
All that's left is to implement them.
The first two are reports of the National Assembly and Senate investigations.
The third, called the Donnadieu Report and presented to the Economic and
Social Council at the end af I981, takes up the larger themes of teh previous
reports again, further extending the analysis, in other words adding an
attempt at a middl~ and long term forecast giving full play to foreseeable
technological progress. "Only rechnological progr~ass," states Gerard
I
I:onnadieu i.n his introduction, "can give a future to an industry which,
without it, strongly risks merely hopeless development."
The vPrdict is severe and proves, if there is a need to, that the situation
calls for immediate decisions without which the patient will not survive
the decade. A comforting aspect: many innovations are in the wings.
"It's enough to record them in the laboratories. Their chance of penetrating
industry remains to be evaluated," says Donnadieu.
The French research laboratories are full of discover~2s waiting to be
intorduced in plants. Unfortunately, it is the foreign manufacturers who
are seizing them and sending them back to us in the form of quality or
competitive imported products at a price against which there is no
protection.
Fortunately, some discoveries have been applied in France itself. For
example, this is true of the Novacore process, invented by ITF-Nord, which
enables more rapid production in spinning, a 30 percent energy savings,
and a more natural feel to the thread. In weaving, automization of the
shops should result in control of the looms (threads which brea:c must be
repaired) from a single room where shutdowns and their cau~~s are detected.
Each loom can have a different production program, givi:zg this he~vy
industry the flexibility it needs so badly. We are therefore moving toward
automatic mills where 1 hundred looms will be supervised by a single
- operator, while today for every 20 looms you need 1 weaver to continuously
run back and forth amont the machines in a deafening racket.
In the garment industry major turt~arounds are yet to be imagined. The orily
real innovation that manufacturers dream of would be the possibility of
working with, and especially transporting, a piece of cloth as easily as
a sheet of inetal. At her sewing machine, an operator spends two thirds
of her time not stiching, in other words handling the cloth. The day
when someone finds a way to make the cloth firm, to stiffen it for the
duration of the manufacturing process, and then to give it back its supple-
ness and all its original qualities, will revolutionize the garment industry.
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Meanwhile, significant progress has already been made in the preparation
_ fo*- the manufacturing process: more and more often computers are being
used for grad'ng, for stenciling patterns, and for cutting, in order to
_ save time and reduce cloth trimmings. There are even robots for ass~nbly
which take over particularly painstaking operations: putting on buttons,
belt loops, pockets. Also, in hosiery, robots separate and turn around
fitted articles, and perform semi-automatic cutting of stockings. Others
can integrate rather complex assembly operations for simple mass produced
products such as underwear; shirts, or some sports clothes.
We Have Outwitted Ourselves
(;ETIH [Garment Industries Technical Study Center] had given itself the
single objective of doubling productivitv, which would cut the number of
_ jobs in half, were everything else to remain the same, which is obviously �
unlikel;~.
For, the inevitable consdquence of the race to innovate will be a reduction
in jobs. In fact, the alternatives are clear: either the textile and
garment industries succeed in increasing their productivity, and therefore
their competitiveness, by all meazs available and their future involves a
substantial reduction in personnEl; or they disappear.
"It is obvious," realizes a textile prof~ssional, "that we have outwitted
oursleves because we did not invest enough compared to our foreign
competitors. And we did not invest when we should have because the low
labor costs did not encourage it. We had to compensate during the crisis
which cleaned us out. Those who were unable to unwilling to overcome the
handicap in time have disappeared or will disappear."
COPYRIGHT: 1982 s.a. Groupe Express
9693
CSO: 3100/557
~ 9
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ECONOMIC FRANCE
GOVERNMENT UNCERTA7N ON 'HOW TO FINANCE RETIREMENT AT 60
Paris L'EXPRESS in French 9-15 Apr 82 pp 56-57
[Article by M. J.: "Retirement: Price to Be Discussed"]
[TextJ The bill for retirement at age 60 is about 17.5
- billion francs. Where_will they come from? The govern-
~ men~ cannot satisfy everyone.
"With the little bit of money that I will get at age 60, how can I f inish
paying for the country house that I bought for ffiy old age?" Rather than
being greeted as the promised "great soci~l advance," the law on retirement
- at age 60 is spreading panic among many of those who should be the f irst
beneficiaries as of April 1983. The plan is often seen by those involved
as a threat to their investments, since it has not answered the humdrum
- question of who will pay and how much. The unions themselves are wary;
" some of them have not hesitated to add their criticisms to those of employers.
This is enough to trouble the administration, which has already been burned
by the strikes that followed th~ law on reducing the workweek.
It was, however, to respond to a union claim that the authorities too these
- risks. During the seventies, the CGT and the CFDT made retirement at age
60 their priority issue; thousands of their members sent postcards to the
Elysee. The theme was taken up by the left and francois Mitterrand, as a
candidate for president of the republic, gave it special emphasis in his
speeches and proposals. What was promised has been delivered: the socialist
government is now acting on it. Unfortunately, the law seems to be hastily
put together.
The administration itself does not know how this change will be f inanced.
So that France can have the "great retirement system" that Pierre Mauroy
spoke of recently, it is not enough to offer everybody retirement at age 60.
The "new xetirees" must have the same resources available as foavier retirees ,
had at age 65. In other words, the equa~ion is simple: fewer contributors
for more money ~to be collected. This is a real f inancial headache because
- of the complexity of the retirement system.
What, in fact, is the retirement pension? First of all, it is a basic pen-
sion, the Social Security pension, which equals SO~percent of the salary
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of the 10 best years of the career, when contributions liave been made for
37-1/2 years. Then there is the supplemental retirement that is given to .
everyone equally and that can be as high as 20 percent of the average career
- saS.ary. Finally, for professionals, there is the retirement linked to their
gpecial systems. In sum, a nonprofessionaZ retiree receives, on the average,
between 60 and 65 percent of his salary, a percentage that professionals
often have difficulty reaching. To guarantee these advantagea as of age 60,
a threefo3d effort will be aecessary.
A Possibility for Everyone
For the Social Security retirement alone, 11 billion francs in new receipts
- must be found each year; to this must be added 6.5 billion for the aupple-
mental retire~:nent, for a total of 17.5 billion. Although the government
has practically complete contrAl over Social Security, this does not hold
true for the supplemental systems, which are managed equally by employers
and unions. It is up to them--labor and management--to decide in the months
to come if they will go along w3,th the government decree. If they do not
- go along, their workers will not'be able to benefit from a fully paid retire-
ment at age 60. This would not definitely be serious for nonprofessionals,
who would only receive a reduced pension between age 60 and 65.
On the basis of these financial realities, several concrete questions arise:
--Will contributions be increased? Nicole Questiauz, minister of national
so~idarity, confidently states that the Social Security pension fund can meet
its future obligations without difficulty. However, the minister is actually
counting on a decline in uneanployment, which will result in additional re-
ceipts (an unemployed individual does aot contribute). In any case, if
retirement at age 60 is taken as a hypothesis, contributions for professionals'
retirement and supplemental systems should ~ump. Total new costs could
reach 18 percent for nonprofessional workers and 30 pzrcent for professionals,
to be shared between workers and employers.
--Who will benefit from retirement at age 60? It will be optional, but open ~
to everyone that has contributed for 37-1/2 years. This will be an obliga-
' tory condition, whereas now anyone, even if he has contributed less than
. that length of time, can retire at age 65 with a reduced pension. "The
change should primarily benef it those who have contributed the longest, and
who, on the average, die sooner than ~he otheY~s," explained Nicole Questisux.
--Can you accumulate benefits if you work after age 60? Yes, but only until
age 65, Past this age, continuing to work will not increase the pension.
Now, retirement can be improved by working until the age of 75.
--Will you be allowed to work while collecting your pension? Yes, as long
as you change your professional activity. But this would result in a penalty
in the form oi a contribution to UNEDIC--National Union for Employment in
Industry ana Commerce--the unemployment fund--when the salary surpasses the
minimum wage level.
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--When will the future of the supplemental systems be decided? Ni~cole
' Questiaux hopes to receive a prel3minary response from labor and management
as early as next July. But theoretically they have until 1 April 1983
- to consider this.
This, in fact, is the date on which retirement at age 60 should take over
from the "income quarantee." Created in 1977 by agreement between the
owners and the unions, the income quarantee up to now enabled 300,000 workers
to retire at age 50 with 70 percent of their last salary. Union leaders
regret that the new law is not as generous.
According to Nicol~. Questisux's calculations, Pliminat;ing the income
guarantee will save the state 15~billion francs, almost the equivalent of
Social Security expenditures for retirement at age 60 (17.5 billion).
But there is one problem--it is not the same money. The transaction will
balance nicely by transferr~ng state expenditures to employees and f irms.
A good reason for unions and management to complain.
COPYRIGHT: 1982 s.a. Groupe Express
9720
CSO: 3100/589
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ECONOMIC IT~"Y
CIAI~I'S REPOAT ON FINANCIAL PROBL~IS OF INDUSTRIAL SECTOR
Milan IL SOLE-24 ORE in Italiaa 25 Apr 82 pp 1, 2, 11
[Articl~ bq Guido Gentili: "The Ital~an System Is in G~cave Danger"]
[Text] Rome--Called to appear at a hearing of ths Hous~e Induatry Commiasiox~
last Thursday, Carlo Azeglio Ciampi--Govsrnor of the Bank of Italy--weat well
beyond the subjsct: .10Finaaciag for firms in ths conteat of the outlook for
the 1980's." The text of his addrass, which was made public yeaterday (and
which we publiah on page 11), ~aa reasonably bs consido~rad a syathesis
anticipating the final conclusioas Ciampi will read to the annual asamnbly
, of the issuing instituts at the snd of May.
There are at least four key paseagse in Ciampi's repor~t which shed light on
thQ strategy the central bank will adopt in the coming months:
1) A siowing down of the rate of inflation, together with containm~nt of the
government deficit and balaacing of the balance of payments, is the "necQS-
sary prerequisite for a gradual declins in the coat o~' monQy and a full
recovery of financial marksts." According to Caimpi, it would be an illusion
to "expect a reduction of interest ratea to solve the various problema be-
setting firme." In short, there will be no change in the policy governing
- interest rates until a concrets aati-inflationary policy has materialized.
Furthermore, Ciam~i added, the "pracarious currancy equilibri~m calle for a
prudent interest rate policy, but sometimea this prudencQ is aot enough, as
we see from recent events which forced the. Bs~nk of It:aly to intervene with
administrative measurea."
2) The internal constraint of a ceili~g on the Trsa~sury's damand still
determines monetary policy to a larg~~ eatent. In this connection Ciampi's
meaaing was cl~ar: after the 1981 excass of about 9 trillion with rQSpect to
sstimates, for 1982 "the date on goverament demar~d for the first months are
not in lins with the estimated ceiling of 50 trillic?n."
Ciampi also made a strong sllusion to the Treasury's checking account, which
. is one of the ways the Treasury mssts part of its demand. ~ccording to
Ciampi, the account should not go in the red by.more than 14 psrcent of the
expensea decided oa by Parliament. But this limit, which is m~ant to be
reached only sxceptionally, has baen reachQd syste~no~atically, with a great
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- degree oi rigidity. Another item which the governor mentioned that is cause
for concern is the fact that this debt (on which interest is charged at the
- rate of 1 percent) is about 30 trillion today.
- In this context, the "containment of the government's def icit is a primary
~ need, and the objective ehould be the balancing of entriea in the current
account; excess debts should be reserved for the capital account.
3) The outlook is anything but encouraging in the area of external con-
straints. Here, too, Ciampi's analysis seems to sound an alarm which the
government and politiical groug~ cannot ignore. Says ~iampi: "In the balance
of monetary assets there is a balance which cannot be disturUed too long.or
too much. For 2 yeara now the balance of paymente (current account) has
shawn large deticita: 8.3 billion ia 1980 and 9.3 billion in 1981. Such
large deficits cannot be further eustaiaed." Nor is it possible to rely
blindly on indebtednAes to procure financial assets on foreign markets; this
operation, warned Ciampi, "is not always easy and is very expensive."
4) tiv~~~ foreign demand still stagnant, the margins of recovery of Italian
- exports are 'bery modest." The only card left to play is competiveness, but
this cannot "be pursued through currency devaluations, since parity changes
unaccompanied by strict measures designed to limit deieand and internal
costs lead to an acceleration of the inflation spiral."
Text of Governor Carlo A. Ciampi's address to the House Industry Commisaion
The following text ia the address given by Carlo Azeglio Bianchi,
Governor of the Bank of Italq, to the House Industry Commission
regarding problems related to the financing of technological innova-
tion in Italian induatry.
The vicissitudes of Italian industry in the second half of the 1970's re-
flect considerable efforts to adapt to the profound changes of the preceding
years in the development and structure of demand. the availability and
relative costs of the factors of production, anu the nature and operation
of financial marketa.
These efforts have been successful in the case of many f irms, especially
small and medium-sized onea. They have not yet been productive for other
firms, especially large ones, partly because they are engageu in sectors like
steel and chemicals which are going through a world-wide crisis. It ie
still doubtful haw long this improvement will last, given sorae of ita
characteristics.
These brief conclusions are based on an.analysis of trends in international
trade, the accumulation of capital, applied research, and the economic and
financial accounts of eaterprises.
International trade in manufactured products left Italy with a credit
balance which increased from $5 billion in 1973 to $19 billion in 1981, down
slightly from $22.1 billion in 1979. This improvement is still nnt enough
to offset the oil deficit, which rose from $1.6 billion in 1973 t4~ $20.4
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billioa in 1981. During the period covered, the balance for non~petroleum
raw materials increased fr~m $-7.4 billion to $~9 billion; the balance for
services was practically unchanged (going from $1.5 billion 20 $2.3 billion);
the larger contributioa from tourism was offset by a~ar~eaing of fiaancial
burdens. As the final effect of the above-meatioaed changes, the balance
of payments on current account, which has a def icit of $2.5 billion in~1973,
had a deficit of $8.1 billion in 1981.
Industry's contri~ution to the balance of psyments was due to contaiument of
imports and increased exports, which went from 6.1 percent in 1973 to 7.1
percent in 1980 (after passing through a peak of 7.5 peresnt in 1929). The
increase in eaports was due mainly to the eo-called "mature" sectora, which
have a high number of emall and medium-sized firma that were able to adapt
quickly to qualitative and geographical change~ in demand. Ia particular,
the credit balance of the textiles, clothing, furnishings, and leather and
"other manufactured products" sectors roae from 1.7 billion lire in 1973 to
11.0 billion in 1981.
_ The improvement in the manufactured prc~ucts balance fe evidence of an
accentuation of the already highly specialized aature of our couatry's low
technology sector, whose share of total exports rose from 38.5 percent in
1970 to 44 percent in 1980. At the same time, the ahare of iatermediate
technology products fell from 50 percent to 44.5 percent and that of high
technology products remained unchanged at the modest 1970 level of 11.5
percent.
These opposimg trends in Italy's productive specialization demonstrate the
viability of moet of our industrial textiles and the possibility of our
maintaining comparative advaatages ~n the so-called "mature" sectors as well
if enterpriaes are eff3ciently maaaged and constantly updated with reapect
to processea and products. Oa the other hand, the inadequate development
of our intermediate and advanced technology sectors is cause for concera.
The backwardness of these sectors seems to indicate a widening, rather than
a reduction, of our country's technological lag.
This phenomenon is partly related ta the long-standing crisis of the large
enterprise, which in these circumstances is unable to adequately play its
irreplaceable part in the development and dissemination of applied research
and innovation. .
One arrives at the same conclusions if one considers the albeit limited data
available on spending for research and development. Its ehare of GNP grew
slightly at the beginaing of the 1970's, then remained at the modest levels
achieved at the beginning of the decade: 0.9 percent, which is less than
half the proportion of income reinveeted in research and developmeat in other
industrialized countries. Direct epending for research and development by
Italian firms also compares unfavorably with spending in other industrialize
countries. Direct spending for research and developmeat by Italian firms
also compares unfavorably with spending in other induatrialized countries,
with the exception of Japan.
15
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~idence of efforts to adapt to the changed compoait~toa of demand and ta the
new relative prices of the factors of production is also apparent in invest-
ment trends, which, wliile influenced in general b}~ the modest otulook for
development, reveal in their composition--mainly oriented towarda substitute
investments--a clesz intention of rationalizing production.
- Italian production at the beginning o~ tY,e 1980's aeema to be marked by a
new form of "d alism" between "f lexible'" firms (mainly small or medium-aized,
many of them i.a the so-called mature sectors) and "rigid" f irme (iqainly large
_ ones, moat of them in more capi~al-inteasive 8ectors).
This dualism emerges from an analyeis of the economic accounta and assete of
firms. In the case of the group of companies studied by Mediobanca, we see
that in general they show years when they operate at a loss which alrhough
it is lower than the 1975 level of 4.2 percent of sales, reached at the
height of the recession which follawed the oil criais, is still between 2
and 3 percent. These losses can be attributed both to inadequate gross
operating margins (7-8 percent) and to the effects of financing burdens
(6-~7 percent), which absorb almosr the entire operating margir..
Capital formation remains modest for all firms. At the end of 1980, firms'
self-financing accounted for 15.5 percent of liabilities, averaging 13 per-
cent fox state-owned enterprises and 18 percent for privat~ enterprises.
This is largely the result of a decliae in self-financing, which was 59 per-
cent of gross capital formation, on the average, for the perioci 1963-1968
(for the group of companies studied by the Bank of Italy), then declined to
51 percent in the next 5-year period and 47 percent in 1974-1979. The
_ decline was especially pronou~iced in the case of partially state-owned
enterprises: their aelf-fina~.icing accounted for only 22 percent of groas
cap~ta~ formatian, compared 'co 63 percent for private enterprises. The
resulting high dependence o~.~ external f inancing has increased the vulaer-
ability of enterprises to fluctuations in f inancial markets; this dependence
is a further constraint affecting monetary policy.
In view of the high price instability prevailing in the It.alian economy aince
_ the beginning of the 1970's, the �inancing of productive enterprises,
especially financing and investments, has been hampered by savera' high
liquidity preference and by the demand for short term funds both at home and
abroad. Above all, becauae of the large government def icit, ~inancing of
firms is "crowded out" by that of the Treasury.
The main problem~ concern risk caoital formation, the demand for long-term
securities, and the cost of deb t-f inancing.
1) Inadequate riak capital formation, which is a structural feature of our
production system, basically reflects supply shortages, since capital splits
offered to the p~ablic are often not thoae of enterpriaes with the best pros-
pects for profit. But demand could be increased considerably by greater
efficiency on the stock market and by a broadening of the type of instru-
ments offered and intermediaries.
It ehould be stressed, at any rate, that increased capital format:ton of firms,
which is appropriate in times of stability, is necessary under ci:rcumstances
7.6
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of wide cyclical fluctuations aad high price and tax iastability. The in-
crease in the demaad for shares. which began ia 1980, resulted in the sale
of stocks worth about 7 billion in 1981, c~mpared to an average of 3 billion
from the 3 preceding years; but the subsequent decline confirmed tY~e fact
- that the etructural problems of the stock market remain mostly unsol~ed.
2) The shift in demand toward deposits and short-term aecurities has in-
creased liquidity aad therefore the instability of the whole economq. and
hampers investment financing, especially for inveatments with long a~aorti-
zat3on periode. Thie is therefore one of the ways inflatioa euerts its
~ desta~ilizing influence and misallocates resources. To affset this trend and
bring the demand for financial assets back to equilibrium it is necessary to
encourage the aale of variable-yield securities with increasing margina as
a function of maturation time, increase the role played by firms and credit
institutiona in the transformatioa of maturationa, aad use fiscal policq to
induce the public to buy longer~~term securities.
The results of this policy have already begun to appear; market salee of
fixed-yield aecuritiea (excluding 1~easury bills), which fell from 20 billion
in 1970 to 2 billion in 1980, rose !~"Q~^ ~ OQ~ ~ ~ n~i � ~ i~~ � ~ ~
(�196) 6.~.~...~.~ew,ws..w
c 3) p qui~n votarian y~`ptaron c~ 3con~w P~ fs~~ del Gobiem� ,
~
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:rsoe 81 40 10 IO 44 4~ 6d
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36
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hux ~rri~iwL w~. ~lvLY
Key:
1. General elections
2. Voting prefexences and opinions of tt?ose polled
- 3. Who they would vote for, and how they voted
- 4. Emopublica poll
- 5. Geneial elections
6. Nationalists
7. Others.
8. Don't know
9. Blank ballots
- 10. Would not vote
11. No answer
12. Invalid and~blank ballots
13. Who would you prefer as presideat af the government?
14. None of these
15. Don't knaw/no answer
16. Men ~
17. Women ,
18. Who do you think will win the next election?
19. Others
20. Don't know/no answer .
- 21. Men
22. Women
23. Towns of less than 2,000 population
~ 24. Towns of more than 500,000 population
~25. Who they would vote for, by occupations
26. National total
27. SalespeoplQ
� 28. Skilled workers
29. Service persoanel
30. Unskilled workers
31. Day laborers ~
32. Business people
33. Agricultural workers
34. Indus~rialists
35. Liberal professions and hi.gh executives
36. Independents
37. Medium-grade personnel
38. Unemployed
39. Retired people
- 40. Students
_ 41. Housewives ~
- 42. Conf idence in the UCD (Government) and in the PSOE
43. Women
44. Men
45. Opinion of how the government has handled matters
46. Well
47. Pretty well
48.. Poorly
49. Can the UCD solve our problems if it continues in power?
50. Yea, it will solve them
- . 37
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51. Things will stay the same
52. Things will be worse
53. If ttie PSOE wins, will it solve our problems?
54. Yes, it will solve them
55. Things will stay the same
56. Things will be worse
57. Note: the total of less than 100X is because of the "don't knows/
no answQrs."
58. Hr,w the people polled claseify themselves politically
59. Men
~ 60. Women
. 61. Extreme Lef t
~ 62. Left
63 . Lef t of Center
64. Center
65. R:Lght of Center
66. Right
67. Extreme Right
68. Don't know/no answer
COPYRIGHT: 1982, Informacion y Revistas, S.A.
8131
CSO: 3110/133
- 38
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N'UR UM'h'IC:IAL US~: UNLY
~ MII.ITARY INTERNATIONAL AFFAIRS
BRIEFS
ANTI-fiELICOPTER MISSILE--The Franco-FRG group Euromissile has started the de-
signing of a proposed helicopter-borne missile for interception of antitank
helicopters. This is the first air-to-air missile project conceived by the
- Furomissile group, whose parent companies, MBB [Messerschmitt-Bolkow-Blohm]
(FRG) and Aerospatiale (France), have, however, already developed some airborne
missiles ~air-to-ground and air-to-sea). The Fakir-H project involves the de-
signing of a new antihelicopter missile that will be interchangeable with Euro-
missile's Hot antitank missile. The Hot is currently in production for the
armed forces of 13 countries (cf AIR ET COSMOS, No 8953, including France, and
the Gazelle, Dauphin, Lynx and Bo-105 helicopters are equipped with it. The
principle of the new weapon system is therefore that it offers very high opera-
tional flexibility to light-helicopter units by enabling them to be equipped
with Fakir-H antitank missiles. It is planned for it to be possible to carry
rhree Fakir-H missiles in the same transport and firing container-tube as that
for the Hot, which would enable a light helicopter to carry up to 18 Fakir-H
missiles. The Fakir-H will be an infrared-guidance missile derived from the
concept of the Ground=to-Air Very-Short Range (SATCP) missile that Aerospatiale
had designed within the framework of the competition organized by the French
~ offi.cial services and won by MATRA [Mechanics, Aviation and Traction Co] ~cf
AIR ET COSMOS, No 866). The Fakir-H should therefore be an antihelicopter mis-
sile of about 6,000 meters range, which seems compatible with the conditions of
antihelicopter warfare in relatively limited zones of terrain such as those
that Europe has. [Text] (Paris AIR ET COSMOS in French 15 May 82 p 57] [COPY-
RIGIIT: A. & C. 1982] 11267
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MILITARY FRANCE
TRANSALL, MIRAGE F-1'S CARRY OUT DELIVERY, FUELING EXERCISE
Paris AIR ET COSMOS in French 15 May 82 p 70
[Article by J.G.: "The Air Force Demonstrates Its Ability to Carry Out Rapid-
Assistance Operations") ~
[Text] On two occasions in 48 hours, two major commands of the French Air
Force have given proof of their ability to carry out rapid-assistance opera-
tions at distances very far from metropolitan France.
Air Defense
On the first occasion--it was Thursday, 6 May 1982--four Mirage F-1's of the
Sth Fighter Wing, which is based at Orange and is one of the units of the Air
Command of the Air Defense Forces (CAFDA), took off from the Solenzara (Corsi-.
ca) base and flew nonstop to Djibouti after being refueled in flight by a
- C-135-F four-jet airplane of the Strategic Air Force. The flight's duration
was 5 hours 30 minutes. These four combat planes returned to France nonstop on
~ Monday 10 May, after being refueled in flight again. As it happens, this was
not a"first" for the Mirage F-1. The first time was 29 January 1980: a non-
stop flight over the same distance (5,000 km) wae done in 6 hours, with four
in-flight refuelings for each plane, by four Mirage F-1's of the same wing.
Since then, other operations of this type have been carried out without mention
- being made of them; they are part of the normal training of the Air Force's
- combat pilots and demonstrate concretely the possibilities of deployment of
Mirage F-1's for rapid-assistance operations.
Tactical Air Force
The Tactical Air Forces Command (FATAC) has for its part demonstrated, on sev-
eral occasions since 1977, its capacity for long-distance deployment of the in-
~ flight-refuelable Jaguar tactical-support planes.
Air Transport
On the other hand, what has been done routinely in recent times by Air Force
fighter pilots and combat pilots has not until now been able to be done by the
Military Air Transport Command (COTAM), since the Transalls it previously had
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available to it were not refuelable in flight. This deficiency has now been
remedied.
Un the night of Saturday 8 May-Sunday 9 May 1982, at 8 pm, a new-series C-160
Transall bearing the markings of the 64th Transport Wing (Evreux) and heavily
laden with freight took off from Lorient for Cayenne (Guiana). After being re-
fueled in flight some 6 hours later by another second-generation Transall C-160
--this one assigned, though, to the 61st Transport Wing, and having taken off
from the Azores--the plane landed at Cayenne-Rochambeau at 12 noon Paris time
on Sunday 10 May. It had flown some 7,000 km nonstop in 16 hours of flying
time. The in-flight refueling as such lasted about 30 minutes. A look at the
map shows that Cayenae is farther from Lorient than the southern coast of Great
Britain is from Ascension Island. ,
Ttie same C-160 refueled on the outward flight was to return to its base in
France on Thursday 13 May, after a second in-flight re�ueling operation on the
return trip, under the same conditions as on the outward trip.
More Transalls?
To date, the Air Force has ordered 25 refuelable Transalls, 10 of which are al-
so refuelers. The credit-commitment stage has not been reached for any addi-
tional order of rransport planes of this type. These current exercises give
solid arguments to those who consider that the COTAM should be able to have,
among other things, a larger number of second-generation Transalls.
" COPYRIGHT: A. & C. 1982 .
- 11267
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� V/~ V~ ~ ~~r~1\~I V~JLI V~ \LI�
MILITARY FRANCE
BRIEFS
RECONNAISSANCE MISSILF. IN AUTUMN--The French Air Force will receive its first
CL-89 reconnaissance missiles in Autumn 1982. This pilotless missile (RPV) de-
veloped by the Canadian firm Canadair is already in service in the FRG and in
Great Britain, and it has been ordered by France and Italy. A total of more
than 500 CL-89's have been ordered by these four NATO countries. In France,
Aerospatiale has been assigned prime contractorship for the reconnaissance sys-
tem for the Air Force. Several other French firms are also participating in
the program, including Sintra for the ground control station, ESD [expansion
unknown] for the direction-finding radar, SILAT [expansion unknown) for adapta-
. tion of the carrier vehicle, and SOGERMA~LAeronautical Material Main~;enance
and Repair Company of the Girond~ for t~echnical assistance and personnel-
training. We mention that the CI,-89 control station is used only for peace-
time exercises; in operational use, the RPV is com letely autonomous. ~ext
~aris AIR ET COS~IOS in F`rench 15 May 82 p 5~ ~PYRIGHT: A. & C. 1982
CsO: 3100/695 END
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