France agrees pension reforms, July 2003

On 24 July 2003, in the face of widespread opposition, the French Parliament adopted controversial plans to reform the country's pension system.

Despite strikes and demonstrations, and knowing that similar attempts at reform had caused previous governments to fall, French Prime Minister Jean-Pierre Raffarin pushed through the changes, adamant - said the BBC - that France 'cannot afford to continue with the present system and that the issue should be tackled now - not left to the next generation.'

The National Assembly adopted the new law by a majority of 241 (393 for, 152 against), with the Senate immediately ratifying the decision.

Although unpopular, the reforms will not meet France's forecast pensions deficit and has not, reported the Financial Times, tackled 'the most sensitive and politically vocal groups - the special pension regimes enjoyed notably by the SNCF national railways and EdF and Gaz de France, the energy utilities.' Trade unions have threatened further action when government plans for changes to the national health service are released in the Autumn.

The main element of the reforms is an increase in the number of years' contributions which workers must make. Between 2004 and 2008, contributions for public and private sector employees will be brought into line, rising to 41 years for both sectors by 2012 and then to 42 years by 2020.

The reforms are seen as essential if France is to tackle its budget deficit. They come shortly after Germany announced measures intended to tackle its public finances and stimulate its economy. In the view of the Financial Times: 'Following Germany's recent plans to overhaul pensions and public health, it signalled that Europe's two biggest economies were beginning to address some of their fundamental structural problems.'

Increasing levels of public debt in some Member States have raised concerns over the EU's Stability and Growth Pact. Pensions contribute significantly to government debt, given that Europe's population is ageing. Following discussions at recent meetings of the European Council, a joint Report on adequate and sustainable pensions was issued by the Commission and Council, based on national strategy reports submitted in September 2002 by the Member States.

Links:

BBC News Online:
	24.07.03:	French parliament backs pension reforms
European Sources Online: Financial Times:
	24.07.03:	French pension bill passed by parliament
European Commission:
	Adequate and Sustainable Pensions
French Government:
	Prime Minister's website
European Sources Online: In Focus
	German tax cuts introduced to stimulate economy, June 2003
	Stability and Growth Pact under fire again, July 2003
	Pensions: Report calls on Member States to implement further reforms, December 2002

Eric Davies
Researcher
Compiled: Friday, 25 July 2003

The French Parliament adopted, on 24 July 2003, plans to reform the country's pension system despite widespread opposition.