France's Fraying Social Safety Net

On a cold day in January, Inaya, an unemployed former Ikea manager, waited with about 100 people in a dingy hall at Crédit Municipal de Paris to pawn a Gucci bag and some jewelry. Sporting a tweed jacket and dark pants, she was tapping the broker for cash for the first time as her unemployment benefits dwindled after two years out of a job. “There’s no work out there,” she said, declining to give her last name. “It’s hard to get out of this crisis.”

Europe’s sovereign debt mess and the economic slump it triggered have driven 30 percent more people to the 375-year-old Paris pawnbroker, and swelling numbers of people to charities such as Les Restaurants du Coeur, which runs soup kitchens and gives groceries to the poor. They lay bare the limits of France’s welfare system, the world’s most generous. The costs of this behemoth consume about 31 percent of gross domestic product. Crédit Municipal de Paris spokeswoman Olivia Stauffer says the average number of people turning up at the pawnbroker’s doors has risen to 658 a day from 508 in 2010. “People have more and more difficulty recovering the objects they pawn,” she says. “We are a crisis indicator.”