French Government censured over proposed pension reform plan
France under fire over pension plan
Mon, 02 Sep 2013 09:20:41 GMT
The French government has been censured over its proposed pension reform plan, as experts say it has failed to address the real problems.
The reform plan to be submitted on September 18 to government ministers will propose employees and businesses to pay more to the French retirement system.
French businesses have opposed a rise in taxes or contributions as there are worries that it would have an impact on competitiveness.
The proposed increase is controversial since the French economy is struggling with a high cost of labor and a huge tax burden as well as record unemployment.
In addition, the plan would involve increasing a French worker’s contribution period from the current 41.5 years to 43 years by 2035, meaning that most French employees will have to work after the age of 62 to qualify for a full pension.
According to the administration of President Francois Hollande, the proposed measures would save the debt-stricken retirement system 7.3 billion euros (about $9.6 billion) by 2020 and balance its books by 2040.
However, critics say the planned reforms are not deep enough and that the government calculations are incorrect.
“The measures are disappointing. They will only address the deficit of the general pension scheme for private sector employees, not that of the overall pension system,” according to HSBC Global Research.
The pension system would be “still in a deficit of 13.6 billion euros in 2020 according to the French pension council even if all the measures announced are applied,” HSBC Global Research stated.
The reforms would also go against the recommendations by the European Commission, which advised France to raise both the minimum and full pension ages and to review many exemptions in the system.
Meanwhile, an opinion poll presented on August 31 showed 62 percent of the French people were against the pension reforms.
French General Confederation of Labor (CGT), which is against the reforms, has threatened with strikes and protests for September 18.