French PM offers concession to unions over pension reform

PARIS-Reuters

French Prime Minister Edouard Philippe on Jan. 11 offered a major concession to unions contesting his government's overhaul of the pension system, in a move aimed at ending strikes which are now in their fifth week.

Philippe said in a letter to unions and employers that he was prepared to withdraw plans to raise the retirement age for full pension benefits by two years to 64 if certain conditions were met.

"The compromise that I'm offering ... seems to me the best way to peacefully reform our retirement system," Philippe said in a copy of the letter obtained by Reuters.

He made the concession after talks between the government and trade unions to break the deadlock failed on Jan. 10.

The CFDT, France's biggest union which is inclined to accept a limited reform, welcomed the move, saying in a statement that it showed "the government's will to find a compromise".

But the hardline CGT union, which wants the reform dropped altogether, rejected the offer and called on workers to participate in a series of protests planned for next week.

The government's concession comes as tens of thousands of demonstrators marched through eastern Paris against the reform, which aims to replace France's myriad sector-specific pension schemes with a single points-based scheme.

The protest turned violent on its fringes with police firing tear gas and charging groups smashing windows and lighting rubbish bins and billboards on fire.

The government's standoff with the unions is the biggest challenge yet of President Emmanuel Macron's will to reform the euro zone's second-biggest economy.

Philippe's government had hoped to create incentives to make people work longer, notably by raising the age at which a person could draw a full pension to 64 while maintaining the legal retirement age at 62.

The government has argued that the pension reform, which would be the biggest since World War II, would make the system fairer while also putting it on a more sound financial footing.

With one of the lowest retirement ages among industrialised nations, France currently spends the equivalent of 14 percent of economic output on pensions.

Philippe aims to present the reform bill on Jan. 24 so that it can be discussed in parliament starting in mid February with the aim of passing a law before the summer break.

He said in the letter he expected unions and employers to agree on how to ensure the long-term financing of the pensions system in April. If they failed to agree, the government would pass decrees guaranteeing the pension system is in the black by 2027, he added.

The CGT said that was simply a tactic to impose a higher retirement age as unions and employers were unlikely to find an agreement.