FRANCE’S GOVERNMENT was bracing itself for resistance from unions and opposition parties yesterday after announcing plans to gradually raise the retirement age from 60 to 62.
President Nicolas Sarkozy believes the long-expected reform can balance the heavily indebted pension system by 2018 and convince investors France is serious about reining in state finances.
The plan to raise the legal retirement age to 62 over the next eight years breaks a long-standing taboo in a country where the right to retire at 60 is considered one of the major achievements of the late Socialist president François Mitterrand. He cut it from 65 in 1982.
“There is no magic trick when it comes to pensions,” Labour minister Eric Woerth said as he unveiled the proposals yesterday. “We cannot ignore the fact that the French population is ageing. We have to confront this fact. Our European partners have done this by working longer.”
As well as raising the retirement age, the plan envisages an increase in work years needed to claim a full pension, from 40.5 years to at least 41.5 in 2020.
To make the package more palatable to the unions, the government promised tax increases aimed primarily at the rich, including a 1 per cent surcharge on the top income-tax bracket. “Those who have more resources than others should contribute more than others to financing pensions,” Mr Woerth said.
France’s pension system is forecast to register a €32 billion deficit in 2010, with this figure set to rise above €100 billion by 2050. Mr Woerth said the proposals meant accounts would be balanced by 2018 and register a €100 million surplus in 2020. His forecast assumes the jobless rate would be 6.5 per cent in 2018 – a level not seen in France for many years.
