Despite possible strikes, France Macron is again pushing for a pension reform

The French government presents new plans to modernize the pension system. Analysts expect some backlash from some workers.

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French President Emmanuel Macron is at it again: A new pension reform will be unveiled on Tuesday and is expected to face backlash.

Macron is entering his second term as French president, but overhauling the pension system is a long-standing promise dating back to his first election in 2017.

The legal retirement age in France is currently 62 – lower than in many developed countries, including much of Europe and the US. The public sector also has “special arrangements” or sector-specific agreements that allow workers to retire before the age of 62.

In late 2019, Macron’s government proposed a unified, points-based system that would allow a person to retire once they accumulated a certain number of points. The idea was a cross-industry harmonization of the rules.

But the plan met with an uproar. Public sector workers – arguably those with the most to lose from potential reforms – protested for several days in some of the country’s biggest strikes in decades. Faced with such strong resistance and the coronavirus pandemic, Macron decided in early 2020 to put the plans on hold.

This year is marked by the pension reform.

Emmanuel Macron

President of France

There was talk of revising the plans in early 2022, but it was judged too close to the presidential election held in April last year.

“This year will be a year of pension reform with the goal of balancing our system for years and decades to come,” Macron said during his speech New Year’s speech.

“As I promised you, this year will indeed be the year of pension reform aimed at ensuring the balance of our system for years and decades to come.”

He wants to conclude the negotiations in time so that new rules will apply from the end of summer 2023.

“There will be disruptions, there will be strikes, [but Macron] has decided to move quickly: the current process is intended to last no longer than 90 days,” Renaud Foucart, associate professor of economics at Lancaster University, told CNBC’s Squawk Box Europe on Tuesday morning.

“Fast and dirty maybe, but a lot more likely than five years ago,” he added.

What to expect

One of the main topics will be the new retirement age. In the past, Macron suggested this could be raised from 62 to 65, but at a gradual pace with increases of around 4 months per year until 2031.

French media have reported that the government is considering increasing the amount for those on the lowest pensions in order to make the transition to longer working lives more acceptable to the public. CNBC has not been able to independently verify this information.

Macron’s first proposal from 2019 also included tackling the so-called “special regimes”.

Any new changes to these agreements are likely to provoke backlash from affected industries.

France’s comparatively low retirement age is a burden on public finances. The country’s Pension Advisory Council has reportedly estimated the deficit in the pension system at around 10 billion euros ($10.73 billion) annually between 2022 and 2032.

https://www.cnbc.com/2023/01/10/france-macron-to-push-for-pension-reform-again-despite-potential-strikes.html Despite possible strikes, France Macron is again pushing for a pension reform

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