Pension debate looms in French election campaign

12th January 2007, Comments 0 comments

PARIS, Jan 12, 2007 (AFP) - France's next government will have to persuade workers to stay at work much longer if the country's generous pension system is to survive into the 21st century, a top advisory body warned on Thursday.

PARIS, Jan 12, 2007 (AFP) - France's next government will have to persuade workers to stay at work much longer if the country's generous pension system is to survive into the 21st century, a top advisory body warned on Thursday.

Raising the retirement age is an explosive issue in France, and one that neither of the main candidates in April's presidential election, the right's Nicolas Sarkozy or the Socialist Segolene Royal, has tackled head-on.

Employment rates among France's 55-64 year-olds stand at 37.8 percent, among the lowest in the European Union, where the average is 42.5 percent, due to a relatively low legal age of retirement, at 60, and high unemployment.

The French Orientation Council on Pensions (COR) delivered a report Thursday to Prime Minister Dominique de Villepin on the urgent need for reform, warning the shortfall in the system had "worsened more than expected".

This year the pensions deficit is expected to reach 3.5 billion euros (4.5 billion dollars), compared to 2.4 billion last year, as the system is stretched by an ageing workforce and unemployment of 8.7 percent.

By 2050, the system will need an injection of between two and five percent of gross domestic product (GDP), or between 30 and 80 billion euros, as the active population falls relative to the inactive population, it predicted.

From 2008, the report warned it would be a "strategic" imperative to improve French employment rates among senior workers, as well as tackling unfair privileges on a case-by-case basis.

Though the age of retirement in the private sector is 60, those in the public sector leave far earlier, from age 45 in the armed forces and civil service, and from age 50 in the state-owned rail and energy sectors.

In addition, private sector workers receive a pension based on their 25 best years, following a reform introduced by the current centre-right government, whereas in the public sector it is calculated from their end-of-career salary.

Sarkozy has promised to address the inequalities between public and private sector if he is elected, but neither he nor Royal has made clear commitments to raise the age of retirement beyond 60.

The head of the CNAV national pension fund, Daniele Karniewicz, warned that French people would have to make "an extra effort". She said a reform of the so-called special regimes, though it would have relatively little financial impact, was an important symbol.

But the unemployment agency UNEDIC warned that -- although the government says it wants to keep more seniors in work -- thousands are being struck off unemployment lists from the age of 55 and 57, on the grounds that it is too difficult for them to find a job.

Some 415,000 people now fall into that category, out of work but not appearing in official unemployment statistics.

"We have a real structural problem concerning employment among seniors," said UNEDIC president Annie Thomas.

Copyright AFP

Subject: French news

0 Comments To This Article