France: government, unions prepare large-scale pension cut

The main lines of the current pension reform are mandated by the 2003 pension cuts carried out under then-Prime Minister Jean-Pierre Raffarin, including an increase in 2008 of the mandatory pay-in period if there were no major change in demographic trends. As a result, it is expected that the reforms laid out by the social partnersthe unions and employers organizationsand the state will be passed by simple executive decree, requiring no new law in parliament. After the April 28 meeting, Bertrand published an initial draft of reforms, titled 2008 Rendez-vous on pensions.

The draft states that the pay-in period increase is justified due to the increase in life expectancy noted by the INSEE [National Institute for Statistics and Economic Studies]. The pension plans worsening financial situation reinforces its necessity.

The draft also announces several minor, largely cosmetic measures to help poorer retirees. One required pensions to pay 60 percent of the pension amount to the spouse of a deceased retiree by 2011, up from 56 percent. Another required the pension system to pay a worker who has worked on full-time minimum wage (SMIC) for the entire required pay-in period at least 85 percent of the SMICa measure affecting relatively few minimum wage workers, who often have long periods of irregular or part-time employment.