The French government presents new plans to modernize the pension system. Analysts expect some backlash from some workers.
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French President Emmanuel Macron attacks again.
A new pension reform proposal was unveiled on Tuesday, which included plans to raise the retirement age in France – which is expected to face significant backlash in the country.
Macron is entering his second term as French president, but overhauling the pension system is a long-standing promise dating back to his first election in 2017.
The legal retirement age in France is currently 62 – lower than in many developed countries, including much of Europe and the US. The public sector also has “special arrangements” or sector-specific agreements that allow workers to retire before the age of 62.
In late 2019, Macron’s government proposed a unified, points-based system that would allow a person to retire once they accumulated a certain number of points. The idea was a cross-industry harmonization of the rules.
But the plan met with an uproar. Public sector workers – arguably those with the most to lose from potential reforms – protested for several days in some of the country’s biggest strikes in decades. Faced with such strong resistance and the coronavirus pandemic, Macron decided in early 2020 to put the plans on hold.
This year is marked by the pension reform.
President of France
There was talk of revising the plans in early 2022, but it was judged too close to the presidential election held in April last year.
“This year will be a year of pension reform with the goal of balancing our system for years and decades to come,” Macron said during his New Year’s address.
“As I promised you, this year will indeed be the year of pension reform aimed at ensuring the balance of our system for years and decades to come.”
He wants to conclude the negotiations in time so that new rules will apply from the end of summer 2023.
“There will be disruptions, there will be strikes, [but Macron] has decided to move quickly: the current process is not intended to last more than 90 days,” Renaud Foucart, senior lecturer in economics at Lancaster University, told CNBC’s “Squawk Box Europe” on Tuesday morning.
“Fast and dirty maybe, but a lot more likely than five years ago,” he added.
Étienne Ollion, a sociology professor at the Ecole Polytechnique, told CNBC’s Street Signs Europe on Tuesday that Macron is “very interested in preserving the image of a reformist president.”
His first term in office was marked by important reforms that touched on issues such as labor law and taxation.
What was revealed?
At a news conference on Tuesday, French Prime Minister Elisabeth Borne said the government plans to raise the retirement age from 62 to 64 by 2030.
“I am aware that changing our pension system raises questions and fears among the French,” Borne said, according to a translation of Reuters.
In the past, Macron has proposed raising that number from 62 to 65, but at a gradual pace with increases of about four months per year through 2031.
Macron’s first proposal from 2019 also included tackling the so-called special regimes.
Any new changes to these agreements are likely to provoke backlash from affected industries.
France’s comparatively low retirement age is a burden on public finances. The country’s Pension Advisory Council has reportedly estimated the deficit in the pension system at around 10 billion euros ($10.73 billion) annually between 2022 and 2032.
Borne added on Tuesday that “nothing is final” and that the new bill, which will be tabled in the next few weeks, would spark a debate about welfare in the country. She said the reforms would also introduce a guaranteed minimum benefit of around 1,200 euros ($1,288) a month.
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