France launches bill to raise retirement age

PARIS (AFP) – The French government was Tuesday to officially launch plans to raise the retirement age from 60 to 62, in a sweeping overhaul of the pensions system that labour unions have vowed to fight.

The plan is a centrepiece of President Nicolas Sarkozy's reform agenda as he eyes a reelection bid in 2012, but it has been overshadowed by a huge political funding scandal that hit his Labour Minister Eric Woerth.

An elderly man watches television in a retirement home in Grenoble, France. AFP file

Under the plan, French workers will have to pay contributions for a longer period and some new taxes will be imposed on high-income earners and on capital gains to help plug a gaping hole in pensions funding.

The most controversial parts of the plan will be pushing back the minimum retirement age from 60 to 62 by 2018 and bringing pub sector pension plans in line with those in the private sector.

Talk of raising the retirement age has been taboo in France, where the right to stop working from age 60 has been enshrined since 1982, one of the main legacies of Socialist president Francois Mitterrand.

Sarkozy said Monday he was ready to discuss some of the measures in the bill with the trade unions, but that the 62-year target and the extension of public sector employee contributions would stay.

"I'm telling you: 62 years, that we won't touch," he said in a major television interview called in an attempt to move beyond the Woerth scandal.

"I'm telling you: The equality if public and private contributions, that's a question of justice. On the rest, we'll be open to hear what our negotiating partners say," he declared.

The plan prompted mass street protests last month and labour unions have vowed further action when parliament debates it in September.

"I'm expecting demonstrations. I know that people are suffering. What will make a difference will be our idea of what is just. Not the size of the protests," Sarkozy said.

Woerth's presentation of the bill at Tuesday's cabinet meeting comes at an especially delicate time, after a scandal linked to the fortune of France's richest woman, Liliane Bettencourt.

A government report cleared Woerth of accusations that he helped Bettencourt evade taxes, but other probes into her affairs are pending and he has also been accused of illegal campaign funding and conflicts of interest.

On Tuesday he is to formally present his pensions bill to the government, which is expected to approve it and pass it on to parliament to debate in September. Sarkozy predicted it would be voted into law shortly thereafter.

The reform is aimed at helping the government meet its announced deficit target of three percent of GDP in 2013. Woerth says it aims to balance the books and achieve "zero-deficit" in its pensions scheme by 2018.

France's biggest union, the CGT, has told the government to go back to the drawing board and come up with another plan, calling it a "flagrant injustice" that puts the burden of reform on workers.

Jean-Claude Mailly, leader of the Force Ouvriere union, has branded the draft legislation "socially unjust and economically inefficient".

Like many other European countries, France is facing a funding shortfall in its pensions plan due to a growing older population and fewer working-age people paying contributions.

The deficit is on track to reach 45 billion euros in 2020 and could reach between 72 and 115 billion euros by 2050, according to France's COR pensions advisory council.

French workers on average retire at a younger age than most of their counterparts in Europe and the proposed changes will still leave them with one of the lowest retirement ages on the continent.

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