PARIS -- Last June 15, two masked men marched up to French Prime Minister Jean-Pierre Raffarin's private home in western France, removed the electric meter and cut off the power.

They weren't vandals or robbers. They were employees of Electricite de France SA, protesting the government's decision to sell as much as 30 percent of the giant state-owned power utility on the stock market this year.

The raid was just one among hundreds of power cuts organized by EDF employees affiliated with France's powerful Confederation Generale du Travail union amid a broad strike last year. Among their other targets: the presidential palace housing Jacques Chirac, which had to switch to a backup generator, and two Paris train stations -- stranding 300,000 commuters for several hours on June 28.

The sabotage was both a testament to the CGT's clout and a sign of how much the union stands to lose if EDF, the world's largest power utility in terms of production capacity, becomes a publicly traded company. The communist-leaning union commands the allegiance of more than half of EDF's 110,000 French workers and controls the company's social-benefits council.

The council is a vast welfare machine that subsidizes meals, vacations and cultural events for EDF employees, and provides them with free health care -- all paid for with a huge budget funded by electricity consumers. EDF employees also enjoy lifetime employment, early retirement, subsidized housing and 90 percent discounts on their power bills, among other perks. The CGT has closely guarded these advantages for decades. If EDF is listed on the stock market, the union fears investors will promptly put an end to them.

France's attempt to partially privatize and slim down EDF over the objections of unions like the CGT is a test case for one of the biggest challenges facing Continental Europe: whether it can trim its costly welfare states and shed the structural impediments that have clogged its economy.

Across Europe, countries from Italy to Spain have long wrestled with bloated public sectors. In France, the problem is especially acute. The country has 6.4 million public-sector workers -- more than a quarter of its work force. Like EDF employees, they enjoy gold-plated benefits and are less productive than their private-sector counterparts. The result is a bulging state budget deficit that has breached European Union rules for three years running, and an economy, the world's fifth-largest, that grew at a rate of 2.3 percent last year. By contrast, the U.S. economy grew at a 4.4 percent rate in 2004.

CGT officials say that maintaining EDF employees' generous benefits is only one reason the union staunchly opposes the partial privatization. They argue that liberalizing France's power market would cause wild fluctuations in electricity prices and blackouts, citing California's 2001 power crisis. They also say it would increase the risk of accidents as safety procedures at France's 58 nuclear plants take a back seat to profits.

So far, the government has promised not to mess with EDF employees' benefits despite the company's partial privatization, and EDF hasn't punished any of last year's strikers for fear of provoking further labor unrest that might scuttle the initial public offering. To prevent the situation from escalating, local police allowed the saboteurs who removed the power meter at the prime minister's home to stage their symbolic protest. But EDF executives say privately that once the company is listed, they plan to scale back the perks as union contracts come up for renegotiation.

The government intends to sell between 8 billion euros and 11 billion euros of EDF shares next fall in what would rank as one of Europe's largest IPOs. The extra cash would help EDF shore up its weak balance sheet and prepare the company for the end of its monopoly in July 2007, when France must open 100 percent of its power market to competition. Analysts value the company at around 40 billion euros.

EDF's benefits have their roots in the company's unusual history. EDF was created in 1946 as France emerged from Nazi occupation. In an attempt to speed up the country's reconstruction, a coalition government headed by General Charles de Gaulle nationalized many industries. Marcel Paul, a hero of the French Resistance who spent three years in a German concentration camp, was named minister of industrial production.

At the time, France was dotted with hundreds of small private power companies. Mr. Paul, a mechanic and fervent Communist who had risen to become one of the CGT's leaders before the war, pushed to unify and nationalize the power sector. In addition to helping the state rebuild the country, he argued, nationalization would take the electric grid away from entrepreneurs who were perceived to have collaborated with the Germans.

Mr. Paul merged 931 electric utilities into one state-owned giant and gave EDF workers a special status that entitled them to generous perks. The biggest of these was the social-benefits council. One percent of EDF's revenue would be set aside each year to subsidize vacations and fund the health care of employees.

Today, that council, the Caisse centrale d'activites sociales, is a company unto itself. The CCAS, which is a nonprofit organization, has an annual budget of 417 million euros, employs more than 18,000 people, and owns 216 holiday resorts and 150 restaurants. Though it is funded with EDF revenue, EDF's management has no oversight of it. The council is loosely accountable only to the French finance ministry. The CGT controls its board and gets to name its president.

Critics say the union uses the CCAS to maintain its grip on EDF's work force. The CCAS publishes a left-wing magazine full of articles and editorials that oppose the partial-privatization plan. A cover story in last month's issue profiles a group of EDF employees dubbed the "Robin Hoods" who restore power to customers who can't pay their bills. The article calls EDF's planned stock-market listing "a poison inoculated" by the government.

At CCAS-run company canteens, prices are set on a sliding scale, based on an employee's income. Workers who vacation at little cost at the CCAS's holiday spots are greeted by resort managers who relay the CGT's anticapitalist views. Portraits of Mr. Paul, a revered figure at EDF, hang on the walls at many of the resorts.

The CCAS recently has come under fire amid allegations of corruption. Last year, an investigating magistrate, Jean-Marie D'Huy, launched a criminal probe on suspicions that the CGT diverts council funds to finance itself and the French Communist Party. Mr. D'Huy declined to comment.

"As far as I know, nothing has been proven," says Olivier Frachon, the CCAS's vice president. EDF says it is cooperating with the probe. A CGT representative, Eric Roulot, says the timing of the investigation is suspicious, coming right as union protests against the partial-privatization plan were gathering steam.

The benefits council is perhaps the most controversial goody at EDF, but there are others, such as the guarantee of job security. That guarantee exists throughout the entire public sector, robbing a quarter of the French economy of any staffing flexibility. Though it is an unwritten rule at EDF, company officials acknowledge that employees can't be fired unless they commit a serious offense.

At any given time, as many as 5,000 EDF employees are without a job description or a real assignment, current and former employees say. Such employees, who report to work every day without anything to do, are often referred to as being in "le placard," or the closet. EDF declines to give a specific figure for the number of employees without an assignment, but says "there are more and more workers whose job changes because of the constant evolutions in the energy sector." The company adds that it devotes a lot of resources to training idle employees so they can take on new assignments.

Jean-Louis Joliot, who was co-chief operating officer under EDF's previous management team, says he spent three years between 1998 and 2001 trying to get rid of executives in bogus jobs. Since he couldn't fire anyone, Mr. Joliot says, he used his power of persuasion and the enticement of severance payments to talk 300 executives into leaving the company.

"Headquarters in Paris was a black hole," he says. The executives "each had an office and a secretary and spent all their time in make-work meetings." In 2003, Mr. Joliot was himself relegated to the closet when he fell out of favor with EDF's then-chief executive, Francois Roussely. He has since retired. EDF declined to comment about what Mr. Joliot describes.

Last summer, an EDF analyst named Corinne Maier published a book called "Bonjour Paresse" ("Hello Laziness") that parodied the French workplace. The book didn't mention EDF, but her bosses interpreted it as a satire of the company and were angered by it. Ms. Maier still works at EDF, but says the reports she writes on power-market trends are "useless" because no one reads them. Her supervisors are trying to transfer her to a different department, but she is fighting the move. The company declined to comment about Ms. Maier.

EDF also illustrates the trend toward shorter workweeks across Europe. EDF employees can work four eight-hour days, or 32 hours a week, in exchange for 9 percent pay cuts. The company says a quarter of its staff has chosen that option. The rest of the staff works 35 hours over a five-day workweek, as French law mandates. Those employees who work 32 hours enjoy nearly 3 1/2 months of annual holiday time, including weekends. The average French worker gets seven weeks of vacation.

To be sure, salaries at EDF tend to be significantly lower than at France's biggest private-sector companies, current and former employees say. Mr. Roussely, the former CEO, raised hackles in 1999 when he hired outside executives to build financial and marketing departments and paid them private-sector salaries. But the new recruits weren't granted EDF employees' customary benefits. Most left after a few years, some with big severance payments, further angering the work force.

Despite relatively low pay, EDF's French personnel costs are high due to all the benefits it extends to its employees. This holds true across much of the French economy. Analysts at iFRAP, a French think tank that lobbies to overhaul state agencies and companies, have calculated that EDF's personnel costs per employee in France are 2 1/2 times as high as at its U.K. subsidiary, EDF Energy. Employees at the company's foreign subsidiaries aren't entitled to the French benefits. EDF acknowledges that its personnel costs in France are higher than in the U.K., but says that is the result of higher pension costs in France.

Not surprisingly, EDF's profitability lags behind that of its European counterparts. At Germany's E.On AG, profit equals about 9 percent of revenue. The average among European energy utilities is around 7 percent. EDF's 2004 profit was 2.9 percent of revenue. At a news conference in March, EDF's new chief executive, Pierre Gadonneix, conceded that the figure put EDF "among the last in Europe."

Mr. Gadonneix has a plan to boost earnings over the next three years by raising electricity rates and cutting the company's annual costs by 7.5 billion euros, including 1.5 billion euros in annual personnel savings. The latter will come from attrition as people retire. As the unwritten rule at EDF dictates, there will be no layoffs.

The most costly of the benefits EDF extends to its workers is a retirement regimen that mirrors the cushy pensions enjoyed by all of France's public servants. According to EDF, more than half of its French workers retire at age 55. On average, these early retirees draw pensions valued at about 70 percent of their last year's salary. Nearly a quarter of them get 75 percent. In 2004, the company set aside provisions of 10.8 billion euros for pensions. This big pension liability is a major reason EDF needs to raise cash.

The CGT vows to stage more demonstrations and job actions to try to derail the listing. Since early March, EDF employees have gone on strike three times at the union's behest. The CGT is calling for another strike Thursday. Asked whether EDF employees' benefits are overly generous, Mr. Roulot, the CGT representative, says: "Not at all. All salaried employees in France and elsewhere should have them, too."