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François Hollande gears up to overhaul French pensions system François Hollande gears up to overhaul French pensions system
(4 months later)
François Hollande is gearing up for potentially the most explosive reform of his presidency as a report on Friday outlines tough measures to overhaul the French pensions system while unions meet employers to agree a deal which the government hopes will avoid crippling strikes and mass street demonstrations.François Hollande is gearing up for potentially the most explosive reform of his presidency as a report on Friday outlines tough measures to overhaul the French pensions system while unions meet employers to agree a deal which the government hopes will avoid crippling strikes and mass street demonstrations.
As a debt-ridden France struggles to preserve the cherished welfare state system for which it can no longer pay, the fraught issue of how to tackle its pensions system, which will fall more than €20bn in the red by 2020, has left the government with difficult choices. Hollande is walking a tightrope to reduce the public deficit while not infuriating his electoral base, with some MPs in his own Socialist party nervous about the reform.As a debt-ridden France struggles to preserve the cherished welfare state system for which it can no longer pay, the fraught issue of how to tackle its pensions system, which will fall more than €20bn in the red by 2020, has left the government with difficult choices. Hollande is walking a tightrope to reduce the public deficit while not infuriating his electoral base, with some MPs in his own Socialist party nervous about the reform.
Pensions reform is a highly charged issue in France, previously sparking massive protests which paralysed the country. In 1995, the right's attempt to tweak pensions sparked the biggest strikes since May 1968, bringing the country to a standstill for a month. The government eventually backed down but was still ejected from office two years later. In 2010, the rightwing Nicolas Sarkozy's pensions reform, which included raising the minimum retirement age from 60 to 62, was passed only after millions took to the streets, oil refineries were blockaded, high schools, universities and even the Louvre museum were picketed as fuel shortages and public transport disruptions cost the economy €400m.Pensions reform is a highly charged issue in France, previously sparking massive protests which paralysed the country. In 1995, the right's attempt to tweak pensions sparked the biggest strikes since May 1968, bringing the country to a standstill for a month. The government eventually backed down but was still ejected from office two years later. In 2010, the rightwing Nicolas Sarkozy's pensions reform, which included raising the minimum retirement age from 60 to 62, was passed only after millions took to the streets, oil refineries were blockaded, high schools, universities and even the Louvre museum were picketed as fuel shortages and public transport disruptions cost the economy €400m.
Until now, the French left has never reformed pensions; instead, François Mitterrand lowered the retirement age from 65 to 60 when he took office in 1981.Until now, the French left has never reformed pensions; instead, François Mitterrand lowered the retirement age from 65 to 60 when he took office in 1981.
The exact nature of Hollande's reform is not yet known. Suggestions in an expert's report to government released on Friday range from longer working lives for French people to higher payroll taxes to merging the system for private and public sector workers. Hollande's consensus-style approach means unions and business leaders will hold talks all summer before the Socialist president makes a decision in September. But unions have already threatened strike action in the autumn if they perceive changes to be too brutal.The exact nature of Hollande's reform is not yet known. Suggestions in an expert's report to government released on Friday range from longer working lives for French people to higher payroll taxes to merging the system for private and public sector workers. Hollande's consensus-style approach means unions and business leaders will hold talks all summer before the Socialist president makes a decision in September. But unions have already threatened strike action in the autumn if they perceive changes to be too brutal.
The French system follows a pay-as-you-go model, with retired people highly dependent on state pensions. Certain professions such as railway workers or staff at the national opera have privileged deals allowing them to leave their jobs earlier than the average citizen.The French system follows a pay-as-you-go model, with retired people highly dependent on state pensions. Certain professions such as railway workers or staff at the national opera have privileged deals allowing them to leave their jobs earlier than the average citizen.
In a departure for the French left, Hollande warned at his major press conference last month: "When we live longer we must work a little bit longer."In a departure for the French left, Hollande warned at his major press conference last month: "When we live longer we must work a little bit longer."
So far, Hollande's reforms, including recent family benefit changes, mostly hit the wealthiest the hardest and did not spark protests. But pensions reform is potentially more contentious as it concerns all French people including the poorest. "Everyone will have to make an effort," the social affairs minister said recently.So far, Hollande's reforms, including recent family benefit changes, mostly hit the wealthiest the hardest and did not spark protests. But pensions reform is potentially more contentious as it concerns all French people including the poorest. "Everyone will have to make an effort," the social affairs minister said recently.
So far, Hollande's only move on pensions has been to partially overturn Sarkozy's changes by returning the retirement age to 60 for the relatively few workers who started working very young in physically demanding jobs.So far, Hollande's only move on pensions has been to partially overturn Sarkozy's changes by returning the retirement age to 60 for the relatively few workers who started working very young in physically demanding jobs.
France, which with Ireland has the highest birthrate in Europe, is not facing the same long-term, ageing time bomb as other nations, but its short-term problem of plugging the pensions funding gap is critical.France, which with Ireland has the highest birthrate in Europe, is not facing the same long-term, ageing time bomb as other nations, but its short-term problem of plugging the pensions funding gap is critical.
With Brussels breathing down Paris's neck over deficit reduction, the Socialist government has said that the only way to preserve the French welfare state is to adapt it.With Brussels breathing down Paris's neck over deficit reduction, the Socialist government has said that the only way to preserve the French welfare state is to adapt it.
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