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France’s Macron to Forge Ahead With Contested Pension Overhaul

PARIS—French President

Emmanuel Macron

is pressing ahead with his plan to raise the country’s retirement age despite opposition from unions and lawmakers, a decisive test of the centrist leader’s ability to enact his pro-business agenda during his second term in office.

Mr. Macron’s government is expected to unveil details of the proposed pension overhaul on Tuesday. The move risks sparking a new wave of protests in France, where tensions have been simmering for months because of rising food and fuel prices. Unions have already called for strikes and pledged to stage nationwide protests this month to block the new measures.

The proposed overhaul has become a symbol of Mr. Macron’s efforts to make France’s economy more competitive while maintaining its welfare state. Revamping the country’s pension system was one the main planks of his campaign platform when he was re-elected president in April. The French leader plans to increase the age of retirement by two or three years, from 62 years old to 64 or 65, because he says it is the only way to preserve the pension system without raising taxes or increasing the country’s debt.

French union leaders, who met with the government last week, say raising the country’s retirement age is unnecessary and would penalize people who started working at a young age.

“We will do everything to force the government to back down,” said Laurent Berger, the general secretary of the CFDT, France’s largest union, in an interview with French daily Le Parisien published Sunday. “There will be no deal with the CFDT.”

Unions say the government should focus instead on helping people age 50 and older to hold on to their jobs to improve the ratio of workers to retirees. France has a higher unemployment rate for seniors than most other countries in Europe, according to the European Union’s statistics agency, Eurostat.

In France, like many other countries, current workers pay for retirees’ government pensions. As people live longer and the population grows older, the ratio of workers to retirees has decreased, putting the system under growing stress. The retirement age in France is lower than in most other European countries. Italians can stop working at 67 while workers in the U.K. retire at 66. In Sweden, however, the retirement age is 62.

France’s pension system recorded a profit of 900 million euros, equivalent to $966 million, in 2021 and is expected to post a €3.2 billion profit in 2022, according to a recent report by a pension advisory panel. But beginning in 2023, as the worker-to-retiree ratio continues to decrease, the system is expected to start losing money, forcing the government to make up the difference and threatening France’s deficit-reduction targets, the report added. Mr. Macron’s government aims to reduce the public-sector budget deficit to below an EU ceiling of 3% of economic output in 2027, from 5% in 2022.

In 2019, when Mr. Macron last attempted to overhaul the country’s pension system, his move triggered the longest transport strike in France’s history, paralyzing the country for weeks.

Mr. Macron had proposed to consolidate France’s 42 pension plans, which vary widely in retirement age and income, into one universal system, and introduce bonuses and penalties to encourage people to work until age 64. But he was forced to shelve his plans when the country went into lockdown because of the Covid-19 pandemic.

The general secretary of France’s largest union, Laurent Berger, has vowed to fight the government on its pension-reform plans.


thomas samson/Agence France-Presse/Getty Images

This time around, public opinion is still cold to the overhaul. A recent Odoxa poll of 1,005 people showed 80% are against increasing France’s retirement age to 64 or 65. 

A significant increase in gasoline prices this month after the government stopped offering discounts at the pump also risks adding fuel to the fire. High fuel prices were at the origin in late 2018 of the yellow-vest movement, named for the high-visibility vests worn by demonstrators. Those protests morphed into nationwide antigovernment riots that rocked the country for months.

Mr. Macron, who lost his majority in the National Assembly, France’s lower house of parliament, in June, will need to find allies to pass his proposed overhaul.

Mr. Macron’s party, Renaissance, still controls the most seats in the National Assembly, but not the majority that allowed the French leader to steamroll the opposition during his first term. Far-right and left-leaning lawmakers have vowed to oppose Mr. Macron’s plans. 

The French president is trying to win the backing of conservative party Les Républicains. Conservative lawmakers want French workers to retire at 63 with a minimum monthly pension of €1,200, compared with €953.45 a month at 62 today. Mr. Macron could agree to raise the retirement age to 63 in 2027, and 64 by 2032 to strike a deal with Les Républicains, analysts say.

The French president could also allow workers with physically demanding jobs to retire earlier to address some of the concerns raised by unions, officials said. These measures, however, are unlikely to pacify unions.

“If for Emmanuel Macron, this the mother of all reforms, then for us it will be the mother of all battles,” said Frédéric Souillot, the general secretary of Force Ouvrière, another French union.

Write to Noemie Bisserbe at noemie.bisserbe@wsj.com

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