France to unveil pension overhaul in test for Macron

© Reuters. FILE PHOTO: Protestors and French CGT labour union workers attend a demonstration as part of a nationwide day of strike and protests to push for government measures to address inflation, workers' rights and pension reforms, in Paris, France, September 29,

By Caroline Pailliez and Leigh Thomas

PARIS (Reuters) -The French government on Tuesday will outline its reform of France's Byzantine pension system, a deeply unpopular move that risks mass strikes and will test president Emmanuel Macron's ability to deliver change in his second term.

Macron has said the French must work longer to balance the pension budget - one of the most costly in the industrialised world.

Most French workers currently retire at 62 -- some with jobs deemed to be challenging such as police officers and prison guards can draw a full pension up to a decade earlier -- but are now expected to be told to work two or three years longer.

One thing is clear: Macron is headed for a showdown with trade unions. All of them, including the moderate, reform-minded CFDT reject increasing the retirement age.

For them, 64 or 65 doesn't matter much. Either is a no-go.

In an effort to soften opposition, Macron has offered sweeteners including a guaranteed minimum pension of 1,200 euros for new entrants to the labour market.

Those in jobs where the retirement age is earlier will maintain that perk, but will be expected to work the same number of extra years as the wider labour force.

There are scant signs the concessions will be enough to dampen public opposition.

"We are determined to see this reform through," said Marc Ferracci, a lawmaker from Macron's ruling Renaissance alliance. "Every pension reform in the past has led to a strong mobilisation in the streets - so we expect that."

Overhauling the pension system was a central pillar of Macron's reformist agenda when he entered the Elysee Palace in 2017. But he shelved his first attempt in 2020 as the government battled to contain the COVID outbreak and save the economy.

Since then, Macron has lost his working majority and workers are struggling to cope with spiralling living costs.

Getting the reform package through parliament will be tough. Macron needs the support of the conservative Les Republicains party to get the legislation over the line and avoid resorting to powers allowing the government to bypass parliament.

Their new chief Eric Ciotti has said he backs the reform - if his conditions are met, including a retirement age of 64 rather than 65 and a minimum pension of 1,200 euros for all workers. Nonetheless, his own party is divided.

BROADER PROTESTS

Macron's biggest challenge, however, will be in the streets.

The heads of France's leading unions will meet immediately after Prime Minister Elisabeth Borne outlines the reform in the late afternoon.

Polls show a large majority of the public are against raising the retirement age.

"(The government) has listened to no-one ... and is trampling over the views of most French people," said left wing lawmaker Clementine Autain.

It's unclear, though, whether the unions will be able to harness the anger over pension and simmering discontent over the cost-of-living crisis in a protest movement capable of derailing Macron's plans.

Recent strike action over living costs has been limited to specific sectors, such as refineries and airlines, and outrage over pension reform could easily spark broader protests.

With one of the lowest retirement ages in the industrialised world, France spends more than most other countries on pensions at nearly 14% of economic output, according to the Organisation for Economic Cooperation and Development.

But government spokesman Olivier Veran said: "We're not reforming pensions to be popular but to be responsible. We'll go all the way because it's the only way our social model can survive."