By Emmanuel Jarry
PARIS, May 16 (Reuters) - The French will have to work longer before retiring and high earners will be hit for bigger contributions under the broad outlines of a pension reform laid out by the French government on Sunday.
Labour Minister Eric Woerth offered his proposals for the pivotal reform in a 14-page document sent out to union leaders ahead of talks that are set to start on Monday.
The government wants to overhaul the state's loss-making, pay-as-you-go pensions system by the end of the year, hoping the move will show investors that France is serious about tackling its growing deficit and debt mountains.
Woerth left plenty of scope for discussion with the unions, but said making people put in more years before drawing a pension was 'the basis for a lasting and fair' deal.
However, he left it open to negotiation if this would be brought about by raising the retirement age, or increasing the number of years anyone must work before leaving employment.
The minimum retirement age in the euro zone's second largest economy is 60, much lower than in many of its neighbours, but unions are adamant that it should stay at this level so as not to penalise people who start working in their teens.
Under a 2003 reform, the government introduced a system that progressively increased the number of years people had to pay into the social security pot before drawing a full pension, with this set to rise to 41 years in 2012.
If the government hiked this level again, it would mean in effect that very few French workers could retire at 60, with many people not entering the jobs market until their 20s.
MAKE THE RICH PAY MORE
As a concession to unions, Woerth confirmed that the government wanted to make top earners pay more into the system, and also increase levies on capital income.
Woerth said the higher contributions would not be calculated in the so-called fiscal shield -- one of President Nicolas Sarkozy's most controversial measures which prevents anyone in France paying more than 50 percent of their revenues in taxes.
Leftist opponents have used this shield to hit the government around the head, accusing Sarkozy of looking to protect the French elite at the expense of the less-well off.
'The government intends to integrate into the pension reform supplementary, solidarity contributions on high incomes and capital revenues,' Woerth wrote in his document.
He also confirmed that the government intended eventually to merge pension regimes for the public and private sectors, with state workers traditionally enjoying greater privileges.
The state pensions system is projected to chalk up a 25 billion euro ($31.76 billion) deficit this year and the government warns this will rise to 100 billion euros a year by 2050 without reform.
The government hopes the Greek-debt crisis, which has cast a harsh spotlight on state deficits across the euro zone, will make it easier to impose a meaningful reform on a nation which has traditionally resisted any hint of economic rigour.
Talks with unions over the document start immediately on Monday and Woerth hopes to draw up a full reform in June.
(Writing by Crispian Balmer; Editing by Elizabeth Fullerton) ($1=.7872 Euro) Keywords: FRANCE PENSIONS/ (crispian.balmer@reuters.com ; +33 1 49495242; Reuters Messaging: crispian.balmer.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
PARIS, May 16 (Reuters) - The French will have to work longer before retiring and high earners will be hit for bigger contributions under the broad outlines of a pension reform laid out by the French government on Sunday.
Labour Minister Eric Woerth offered his proposals for the pivotal reform in a 14-page document sent out to union leaders ahead of talks that are set to start on Monday.
The government wants to overhaul the state's loss-making, pay-as-you-go pensions system by the end of the year, hoping the move will show investors that France is serious about tackling its growing deficit and debt mountains.
Woerth left plenty of scope for discussion with the unions, but said making people put in more years before drawing a pension was 'the basis for a lasting and fair' deal.
However, he left it open to negotiation if this would be brought about by raising the retirement age, or increasing the number of years anyone must work before leaving employment.
The minimum retirement age in the euro zone's second largest economy is 60, much lower than in many of its neighbours, but unions are adamant that it should stay at this level so as not to penalise people who start working in their teens.
Under a 2003 reform, the government introduced a system that progressively increased the number of years people had to pay into the social security pot before drawing a full pension, with this set to rise to 41 years in 2012.
If the government hiked this level again, it would mean in effect that very few French workers could retire at 60, with many people not entering the jobs market until their 20s.
MAKE THE RICH PAY MORE
As a concession to unions, Woerth confirmed that the government wanted to make top earners pay more into the system, and also increase levies on capital income.
Woerth said the higher contributions would not be calculated in the so-called fiscal shield -- one of President Nicolas Sarkozy's most controversial measures which prevents anyone in France paying more than 50 percent of their revenues in taxes.
Leftist opponents have used this shield to hit the government around the head, accusing Sarkozy of looking to protect the French elite at the expense of the less-well off.
'The government intends to integrate into the pension reform supplementary, solidarity contributions on high incomes and capital revenues,' Woerth wrote in his document.
He also confirmed that the government intended eventually to merge pension regimes for the public and private sectors, with state workers traditionally enjoying greater privileges.
The state pensions system is projected to chalk up a 25 billion euro ($31.76 billion) deficit this year and the government warns this will rise to 100 billion euros a year by 2050 without reform.
The government hopes the Greek-debt crisis, which has cast a harsh spotlight on state deficits across the euro zone, will make it easier to impose a meaningful reform on a nation which has traditionally resisted any hint of economic rigour.
Talks with unions over the document start immediately on Monday and Woerth hopes to draw up a full reform in June.
(Writing by Crispian Balmer; Editing by Elizabeth Fullerton) ($1=.7872 Euro) Keywords: FRANCE PENSIONS/ (crispian.balmer@reuters.com ; +33 1 49495242; Reuters Messaging: crispian.balmer.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.