France proposes reforms to indebted pension program | News | DW | 27.08.2013
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France proposes reforms to indebted pension program

The French government has proposed a pension reform in which workers and companies will pay more into the country's retirement system. The measure is France's latest effort to relieve its debt-laden pension program.

Prime Minister Jean-Marc Ayrault said Tuesday the proposed pension reforms would help to relieve the financial burden on France's aging population.

"The reform that I'm proposing aims to fix the accounts in a lasting way while also removing sources of injustice," he said.

Pressure to reform

France's socialist government is under pressure from the European Union to fix a generous state pension scheme that is expected to tally a 20 billion euro ($27 billion) deficit by 2020. Brussels had pushed for more radical reforms, but France has been hesitant to propose major changes to the contentious system.

Previous efforts at reforming the country's pension system in 1995 and 2010, which included an increase in the retirement age, were met with mass protests and damaging strikes.

The latest announced reforms, which will be tabled until September 18, avoid raising the age of retirement beyond 62. Instead, workers and businesses will increase contributions in equal proportions from 2014, in addition to the workers' contribution period rising from 41.5 years to 43 years by 2035.

All said, the reforms aim to bring an additional 7.3 billion euros into the system annually with an eye on balancing the books by 2040.

Cold reception

Most of France's biggest unions rejected the proposals, saying they were sticking to previously planned protests set for September 10.

The head of France's MEDEF employers' association also criticized the plan, calling it a "non-reform" that would discourage companies from hiring new employees due to the increased payments.

"All the government does is tax and then tax some more," he told Le Figaro newspaper. "This is a dangerous reform that is not acceptable to us."

dr/jm (AFP, Reuters)