September 10, 2013 5:20 pm

Brussels signals concern over meagre French pension reforms

Brussels has signalled its clear dissatisfaction with France’s modest pension reforms just as thousands of demonstrators took to the streets in cities across the country to protest against the measures.

The delicate balancing act the socialist government is attempting between demands for bolder reforms and leftwing opposition was amply illustrated by a call on Tuesday by the European Commission to do more for business, coinciding with the leftist newspaper Liberation dubbing François Hollande “The President of the Bosses”.

Olli Rehn, head of economic affairs for the commission, the EU’s executive arm, disparaged Mr Hollande’s limited pension reform package as “a reform à la française”.

The reforms, unveiled last month, aimed at closing a €20bn deficit the pay-as-you-go pension system is set to reach in 2020, included an annual €2.2bn in new contributions by employers, as well as employees.

In an interview with Le Figaro newspaper, Mr Rehn said: “We are waiting to hear how its negative impact on the cost of labour will be compensated . . . the reform of the pension system should not raise the charges on business or discourage employment.”

Although the government has pledged to reduce other charges to offset the pension reform costs, it has yet to give details and has come under fierce criticism from Medef, the business federation, for increasing France’s already high labour costs.

Mr Rehn added: “The charges on labour and the pressure of taxes constitute one of the major handicaps for competitiveness, growth and employment in France.”

But Mr Hollande, who this month pledged a “pause” in a series of tax increases for companies, has come under fire from the left for giving in too much to business pressure.

“It is a supply-side policy, or more crudely the policy of business, that is being implemented today, far from the fundamentals of the Socialist party.” bemoaned Libération in an editorial.

The limited scope of the pension reform, due to be put to parliament later this month, took the sting out of Tuesday’s demonstrations. Tens of thousands turned out in a number of cities across the country and there was some disruption by strikes of rail transport.

But the impact was feeble compared to weeks of strikes and protests that accompanied an earlier reform in 2010 by former president Nicolas Sarkozy. “The unions don’t want a big impact,” shrugged Frédéric Mangin, a teacher at a rally in the Place de la République in Paris. “In reality they are helping the government pass the law.”

Three unions, including the powerful CFDT, have backed the reform and the four that organised the protests say they want it changed, not scrapped.

The main bone of contention for protesters was the increase in the duration of contributions required to qualify for a full pension from 41.5 years at present to 43 years for those born after 1973.

Although Mr Hollande retained the minimum retirement age of 62, set by Mr Sarkozy, most people will have to work much longer to gain a full payout.

“I will have to work to 62 to gain the minimum pension, but you can’t live on that. I’ll have to wait until I am 67 to get a full pension,” said Colette Duclos, a hospital worker and mother of three, who complained that the system discriminated against women who had contribution gaps due to time off for child-rearing.

Youngsters at the protest complained that the image of France as a place of comfortable early retirement was disappearing.

Julie, a 27-year-old unemployed history graduate, said: “In France, 27 is the average age of gaining a permanent job. If you have to contribute for at least 43 years to get a full pension, it means you won’t retire until you are 71.”

Copyright The Financial Times Limited 2015. You may share using our article tools.
Please don't cut articles from FT.com and redistribute by email or post to the web.

NEWS BY EMAIL

Sign up for email briefings to stay up to date on topics you are interested in

SHARE THIS QUOTE