To fight deficits, France plans to raise minimum retirement age from 60 to 62

By Edward Cody
Thursday, June 17, 2010

PARIS -- The French government abandoned a sacred totem of its generous welfare system Wednesday to combat mounting deficits, announcing that workers soon will no longer have the right to retire at age 60 but will have to wait until they are 62.

Labor Minister Eric Woerth, who unveiled the long-debated change, said the move was made inevitable by Europeans' lengthening life expectancy, the global economic crisis and an accumulation of government debt. His ministry has forecast a deficit of nearly $40 billion in the pension program this year as more people take payments and retirement taxes shrink because of the slowed economy.

"All our European partners have [dealt with] this by working longer," Woerth said at a news conference. "We cannot avoid joining this movement."

Germany, for instance, has announced plans to raise its retirement age from 65 to 67. Britain and Italy have settled on 65. In comparison, officials pointed out, France will still have one of the earliest retirement ages in the industrialized world.

But the political symbolism of retirement at 60 has remained particularly strong in France. Along with the 35-hour workweek, it was one of the main heritages of the Socialist government headed by President Fran├žois Mitterrand in the 1980s. Since it was introduced in 1983, retirement at age 60 has come to be seen as an inalienable right, in the same category as paid vacations and health insurance.

The Socialist Party's current leader, Martine Aubry, said the government's plan was "irresponsible" and "unworthy of a democracy." She warned that if Socialists win the next presidential election, in 2012, they will reinstall the right to retire at 60.

Aubry's predecessor as the party's general secretary, Fran├žois Hollande, called the plan "the most unjust reform" and accused President Nicolas Sarkozy of making poor people pay for the economic crisis. Seeking to soften the blow, Woerth announced a 1 percent jump in the tax rate for France's highest incomes and said taxes will also rise on capital gains from investments.

The plan, which is likely to pass easily in a parliament controlled by Sarkozy's coalition, calls for the legal retirement age to rise by four months each year, beginning in July 2011, until it reaches 62 by 2018. At that point, the ministry calculates, the pension fund should be balanced.

Those who begin working before age 18 or who hold down particularly taxing jobs will still be able to retire earlier than age 62, the plan stipulates. Nonetheless, French labor unions announced they will fight the changes.

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