For the past 18 months, France has taken significant steps to consolidate its public finances, capped by a comprehensive pension reform this month. The key has been the restoration of social dialogue as a tool with which to forge long-lasting consensus.
PARIS – Before this year has ended, the French parliament will have enacted a comprehensive pension overhaul, which is essential not only to putting France’s public finances on a sound and sustainable footing, but also to shoring up confidence in the eurozone in 2014 and beyond. Moreover, how the reform was carried out is as important as the measure itself.
France has more favorable demographics than most other European countries. Nonetheless, further effort was needed to strengthen the pay-as-you-go pension system by the equivalent of one percentage point of GDP. The contribution period will therefore be increased gradually, reaching 43 years in 2035.
This effort has gained broad public acceptance because it was fair: both retirees and working people will contribute, as will companies and households. Financing and social needs alike have been taken into account, while the drawbacks of the current system will be addressed, benefiting women, people who have experienced non-continuous careers, those with particularly strenuous occupations, and low-income retirees.