• France's news in English

EU orders France to reform pensions and jobs

The Local/AFP · 29 May 2013, 16:27

Published: 29 May 2013 16:27 GMT+02:00

Facebook Twitter Google+ reddit

France, struggling in recession, must reform its costly pension system and free up a rigid labour market to put its economy back on track and stabilise strained public finances, the European Commission said Wednesday.

French President François Hollande hit back however saying the European Commission could not "dictate" orders.

"The European Commission cannot dictate to us what we have to do. It can simply say that France must balance its public accounts," he said.

"As far as structural reforms are concerned, especially pension reforms, it is up to us alone to say which is the best path to attain this objective," he said, adding that talks on the subject were ongoing with social partners to achieve this with "consensus, justice and responsibility."

Thomas Klau, head of the Paris office for the European Council on Foreign Relations told The Local it's time for Hollande to act.

"Hollande has said himself that the pension system needs reforming and the labour market is something they have began to tackle all be it gingerly but he really needs to go for it now," Klau said.

"Pension reform has been a longstanding priority but its obviously a sensitive issue in France and can mobilize huge opposition. Most countries have not fully dealt with the problem of the aging population and France is definitely lagging behind," Klau added.

Equally important, Klau says is labour market reform.

"There are far too many young people in France stuck in badly or even unpaid internships or low salaried jobs. This is an issue that must be dealt with," said Klau.

The Commission also gave France two years beyond its original deadline to bring a budget deficit estimated at 3.9 percent of gross domestic product this year, to 3.6 percent of GDP in 2014 and 2.8 percent in 2015 - back below the 3.0-percent EU limit.

Current estimates put the deficit - the shortfall between government revenue and spending - at 3.9 percent of GDP this year and 4.2 percent next, with the economy set to shrink 0.1 percent in 2013.

Story continues below…

The Commission said that to meet the new targets, the French government had to build on the steps already taken to liberalise the labour market, streamline the fiscal system and remove restrictive practices in the economy.

A key first step, however, will be for Paris to take steps "by the end of this year to reform the pension system and ensure it is in equilibrium not later than 2020", it said.

As an ageing population pushes pension costs ever higher, the government will have to index payments, adjust the retirement age -- already creeping up steadily -- and generally reduce the system's overall costs, all at the same time as not increasing the burden on employers.

Additionally, France will have to continue to reduce labour costs for employers, such as their social security contributions; boost services and export sector competitiveness, especially among small- and medium-size companies; and streamline the tax system.

The Local/AFP (ben.mcpartland@thelocal.com)

Facebook Twitter Google+ reddit

Your comments about this article

Today's headlines
Where exactly in France are Calais migrants being sent?
Photo: AFP

Here's where the 8,000 migrants in Calais are heading.

The annoying questions only a half French, half British person can answer
Photo: Beery/Flickr/AFP

Being half French, half British is means you get asked a lot of questions (and some of them can be a little annoying.)

Migrants bussed out of Calais Jungle to all corners of France
All photos: AFP

Hundreds of migrants are being bussed across France on Monday ahead of the demolition of the Jungle camp.

The must-see French films of the millennium - Part One
A Prophet. Photo: YouTube Screengrab

Looking for something to watch?

The must-see French films of the millennium - Part Two
Rust and Bone. Photo: YouTube Screengrab

The newest French films you need to see before you die (or alternatively when you get some spare time).

Election Watch
Presidential hopeful reckons a pain au chocolat is 10 cents

So France happily takes the pastry out of him.

French ministry of defence officials die in plane crash
Screengrab: eddydeg/Twitter

The French Ministry of Defence officials were killed on Monday when a light aircraft went down on the island of Malta.

Revealed: The ten most stolen cars in France
A Smart car in Paris. Photo: JR_Paris/Flickr

Thieves in France are getting a taste for luxury cars, it seems.

Analysis - France migrant crisis
Migrant crisis won't end with Calais 'Jungle' closure
All Photos: AFP

The Jungle camp may be being cleared but this won't be the end of the migrant crisis in France.

Brad Pitt and Angelina Jolie 'to sell their French chateau'
All photos: AFP

Want to live where Brangelina got married?

The annoying questions only a half French, half Brit can answer
Sponsored Article
Last chance to vote absentee in the US elections
Forget Brangelina's chateau - here are nine others you've got to see
The must-see French films of the millennium - Part One
How life for expats in France has changed over the years
Why Toulouse is THE place to be in France right now
Video: New homage to Paris shows the 'real side' of city
The 'most dangerous' animals you can find in France
Swap London fogs for Paris frogs: France woos the Brits
Anger after presenter kisses woman's breasts on live TV
Is France finally set for a cold winter this year?
IN PICS: The story of the 'ghost Metro stations' of Paris
How to make France's 'most-loved' dish: Magret de Canard
Welcome to the flipside: 'I'm not living the dream in France'
Do the French really still eat frogs' legs?
French 'delicacies' foreigners really find hard to stomach
French are the 'world's most pessimistic' about the future
Why the French should not be gloomy about the future
This is the most useful French lesson you will ever have. How to get angry
Why is there a giant clitoris in a field in southern France?
French pastry wars: Pain au chocolat versus chocolatine
Countdown: The ten dishes the French love the most
Expats or immigrants in France: Is there a difference?
How the French reinvented dozens of English words
jobs available