If you’re French an have assets worth over €790,000 ($1.1m), there is a tax shield that limits all personal taxation to 50% of income. Sarkozy supports it “to help lure tax exiles back home” says the Economist. But it has led to rebates worth millions for some of France’s richest people, including Liliane Bettencourt, the billionaire heiress to the L’Oréal cosmetics company, who got a cheque from the state for €30m this year. In a country where nearly 8m people live on less than €949 a month.

Thanks to Christina Purcell for this piece which puts the French strikes in context.

A few weeks ago I was uplifted by the sea of union banners amassed under a very grey and rainy sky in Birmingham. It’s a long time since I had seen so many union banners on a UK demonstration and 7000 demonstrating at the Tory conference was a good number for day in which rain never stopped pouring down.

Yet despite that good turnout, what a contrast it was with the demonstrations that have been taking place across the channel over the past four weeks against the government’s “reform” of the pensions system. Yesterday’s general strike saw three and a half million take to the streets across France. Since the beginning of September the strikes and demonstrations have been going from strength to strength.

Clearly the situation in France is very volatile. Sarkozy has made his position clear, backing down on such a key reform is not an option for his government – he is determined to see the attacks on pensions go through. The French working class, on the other hand, is proving even more determined to make sure the government is defeated on this issue.

Opinion polls have shown that the majority of the country supports the actions of the strikers. The numbers taking strike action have grown, particularly in key sectors such as rail transport and oil refineries. In addition the traditionally spontaneously militant French youth have taken to the streets in support of the strikers’ demands – not just university students but school students has well.

The British media has reacted with a certain amount of incredulity to the idea that French youth could be animated by a struggle to defend pension rights. But, leaving aside the fact the youth are clever enough to work out that extending the retirement age is an issue for them in terms of employment opportunities, their militancy also reflects a general anger at Sarko’s rule from the bale-out of the banks at the expense of the working class to his authoritarianism and despicable racist scapegoating of Roma and muslim communities.

And it is this that makes the situation so dangerous for the government, which is finding increasingly in a double bind. They know that whilst the immediate issue is over pension reform, should they cede on this, workers and youth will realise the power they have to fight over other issues. However, as the government digs its their heels in, this only reinforces the growing alliance between public and private sector workers and youth, hence the government’s accusations that unions are manipulating young people and calls to keep youth out of the movement.

The current social explosion has all the marks of turning at the very least into another 1995, when, in the run up to Christmas, the country was paralysed by a rail strike. Like today, the strike had the majority of the population on its side, despite the problems it posed for people in getting on with their daily in the run up to the festive period. Unlike today, in 1995 the reforms concerned only the public sector. Today all French workers are under attack, and whilst, not surprisingly it is public sector workers who are at the vanguard of the movement, the potential to bring the private sector out is clearly there, as shown by the wave of strikes in oil refineries. That is why some commentators have been pointing to a parallel that is even more alarming for the French ruling class: May 1968.

Creating and demonstrating an alliance between all French workers has been the rational behind calling demonstrations at the weekend as well as the weekday days of strike action. This means that those workers in the private sector, in particular precarious workers who are, as yet, unable to strike, can nevertheless demonstrate their solidarity and show Sarko what he is up against.

Another important difference with 1995 is that this struggle comes in the aftermath of a huge transfer of public funds to private banks across the western economies and the promise of harsh all-round austerity programmes. All European workers are facing similar attacks. This has implications both within France, and more importantly beyond. Workers throughout Europe can look to the French working class as beacon of struggle as they take on their national ruling classes. They say there is no alternative, events in the continent demonstrate increasingly that there is.

How the movement unfolds will depend upon the ability of the rank and file of the unions to hold their leaders to account, and also to act independently of them. The CGT leaders’ admission that rolling strike action would “probably” be necessary to defeat the government’s plans obviously has provided an important impetus for those unions that have voted for rolling strike action. Such militant talk reflects the militancy of the rank and file, which the union leaders ultimately want to draw on the in order to strengthen their hands in the negotiations with the government. The masses that have graced the streets of France over the past month have made it clear however, that only one outcome is possible – withdrawal of the governments plans. And afterwards… anything is possible.