France Lowers Retirement Age Despite EU Concern
Please note that we are not authorised to provide any investment advice. The content on this page is for information purposes only.
The French government has cut the pension age for some long-time workers from 62 to 60, reported Reuters on Wednesday, fulfilling an election promise made by President Francois Hollande and earning the ire of some EU officials who had previously warned France against the move.
The French government has cut the pension age for some long-time workers from 62 to 60, reported Reuters on Wednesday, fulfilling an election promise made by President Francois Hollande and earning the ire of some EU officials who had previously warned France against the move.
According to French Social Affairs Minister Marisol Touraine, the measure will cost the government 1.1 billion euros ($1.38 billion) per year up to 2017, followed by a 3 billion euros per annum cost thereafter, which is significantly lower than the 5 billion euros previously estimated.
The change, which comes into effect in November, also reverses Hollande’s predecessor’s, Nicolas Sarkozy, 2010 reforms, which raised the retirement age to 62 from 60.
[quote]“We’ve restored justice. This is a commitment by the president of the republic, and I believe that confidence is also born, in politics, from commitments kept,” said Prime Minister Jean-Marc Ayrault, as quoted by the New York Times.[/quote]Related: Hollande To Impose Salary Cap For Executives At State-Owned Firms
Related: French Presidential Front-Runner Wants A 75 Percent Tax On The Rich
Related: New French Cabinet Takes 30% Pay Cut
All French workers who have spent at least 41 years in labour-intensive jobs will be affected by the new change.
“We committed to put this measure in place quickly for social justice for those who started working early,” said Touraine, adding that the increased financial burden would be financed by greater pension contributions.
Nevertheless, the government’s decision quickly sparked criticism from opposition politicians such as conservative UMP party head, Jean-Francois Cope, who described the move as “madness.”
[quote]”It risks the downgrade of France’s credit rating and at this rate tempts fate. It is not possible for Francois Hollande to continue to bury his head in the sand,” Cope said.[/quote]Hollande’s pension age cut also flies in the face of a warning by the European Commission last week – that France would struggle to meet its fiscal targets without spending cuts, and that the pension system was in danger of over-burdening itself despite Sarkozy’s reforms.
Related: Europe Must Seize Its Opportunity With Hollande: Martin Schulz
Related: Can Hollande Change the Balance of Power in Europe? : Zaki Laidi
Furthermore, Hollande’s move will now likely reduce the size of the French workforce at a time when unemployment rates are already near its peak. According to data from the French labour ministry last week, the number of French jobseekers rose in April for the twelfth month running to 2.89 million, the highest since September 1999, while the ministry has warned citizens to brace for more layoffs in the months ahead.
