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Sarkozy Tweaks Pension Reform

07 October 2010 18:59 (UTC +04:00)

Baku-APA. French President Nicolas Sarkozy on Thursday proposed amendments to his pension reform in a bid to quell protests that have brought millions out into the streets in recent weeks, APA reports quoting The Wall Street Journal.
But unions aren’t backing off and some have raised the heat by making next Tuesday’s strike open-ended. They say three million took to the street for the second strike against Mr. Sarkozy’s key reform, raising the retirement age to 62 form 60, on Sept. 23, and that a weekend protest Saturday attracted even more private sector workers and families.
Unions in the rail transport, energy and mining sector have published notifications that next Tuesday’s strikes will be open-ended rather than just lasting one day, raising the prospect of more significant disruptions to France’s economy.
If successful, the reform would raise the minimum retirement age to 62 from 60 by 2018, and the age at which workers are guaranteed full entitlements without any discount to 67 from 65.
With additional pressure now coming from the debate of the reform in the Senate, Mr. Sarkozy called for an amendment that would allow parents who took at least one year out from work in the three years after the birth of a child, to get guaranteed full pension entitlement at 65.
The amendment for parents will cost â‚¬3.4 billion ($4.7 billion), Mr. Sarkozy’s office said. The shortfall will be financed by an increase in taxes on capital and gains on real estate sales, excluding main homes.
Still, the amendment would only apply for five years and Mr. Sarkozy remained intransigent on the key aspects of the reform.
"The gradual increase in the legal retirement age to 62 is an essential element of the reform as without this demographic guarantee, the necessary balance cannot be achieved," the president’s office said.
Without capitulation on this key aspect, the amendment is unlikely to appease unions.
"I want the head of state and the parliamentary majority to acknowledge that they can’t impose the reform in the current circumstances, as if nothing were going on in the country," the head of France’s CGT union, Bernard Thibault, said Thursday on French radio RTL.
"We want them to start all over again with all the measures proposed for the future of pensions," he said.
The Socialist opposition was also dismissive of Mr. Sarkozy’s amendment.
"This is more of a smoke screen than progress or a sign the government is listening to protesters," the president of the socialist party at the Senate said on French television channel BFMTV. "Those protesting weren’t demanding this; they are saying it is an unjust reform because it is workers who are paying, while financial incomes are preserved," he said.
The planned strikes Tuesday will add to escalating social tensions in France over the last week. A strike against port reform at Fos-Lavera oil terminal in the south of France entered its 11th day Thursday.
If the pension reform were scuppered by mounting protests, the short-term market impact wouldn’t be huge as France still has a relatively strong birth rate compared to its European peers and the fallout from the reform’s failure wouldn’t be immediate, ING’s France economist Oscar Bernal said.
But the prospect of a general strike would be of concern to France’s creditors.
"There are other factors that are more worrying for markets today. For example, the possibility of seeing a general strike spreading to many sectors of the French economy would have a clear effect on production, which would make for a shortfall in economic growth," Mr. Bernal said.