France Provisionally Pulls Retirement Age From Reform Plan

Alan Katz

(Bloomberg) -- The French government signaled it’s prepared to scrap an effort to raise the age at which workers can retire with full benefits to 64 in a bid to get the country’s moderate unions on board with President Emmanuel Macron’s pension reform plan.

“I am prepared to withdraw from the bill the short-term measure which I had proposed, consisting of gradually converging from 2022 toward an equilibrium age of 64 years in 2027,” Prime Minister Edouard Philippe wrote in a letter to unions on Saturday. He cautioned that if the sides fail to reach an agreement, the government will issue new rules by decree to bring financing of the system into balance by 2027.

In hastily arranged meetings Friday, the government presented unions with documents showing that setting the so-called pivot age would generate savings of 3 billion euros ($3.3 billion) in 2022 and 12 billion euros in 2027, according to Agence France-Presse. The retirement age for most French workers is 62, while some categories such as rail and metro employees can stop work several years earlier.

The government is planning a conference with stakeholders to hammer out how to finance the country’s creaking retirement system. In his letter, Philippe said recommendations from that conference will be presented by the end of April.

The potential compromise is an attempt to defuse a situation that’s resulted in mass transport strikes in major cities for several weeks, and to win the support of less radical unions -- in particular the CFDT, France’s largest private sector union.

Left Versus Moderates

The CFDT said in an e-mailed statement that it appreciated the withdrawal of the pivot-age from the reform bill and that it would pursue negotiations in the framework suggested by the government.

While far-left unions are demanding a wholesale rejection of Macron’s reform program, their more moderate peers support the overarching plan to replace 42 separate pension systems with one universal, points-based arrangement. They’ve balked, however, at a measure to finance it by introducing penalties and bonuses to encourage later retirement.

“It’s a day that will mark a real turning point in these discussions,” said Emmanuelle Wargon, France’s deputy environment minister, said on BFM TV.

For the far-left union that has led the strikes, however, Philippe’s letter fell short. Yves Veyrier, who heads the Force Ouvriere union, said the only thing that had changed was that the government was proposing to bring in the new retirement age in 2027 versus a gradual introduction from 2022.

The CGT union, which has been at the forefront of the strikes, called for further protests next week.

Protests, though, appear to be ebbing. Nationwide, some 149,000 joined marches on Saturday, AFP reported, citing the interior ministry, down from 452,000 on Thursday and from 615,000 on Dec. 17.

(Adds comments from government, union officials from the eighth paragraph.)

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