French Unions to Strike as Sarkozy Pension Bill Debate Starts
French Unions Stage Nationwide Strike
Patrick Hertzog/AFP/Getty Images
People consult information boards reading "No traffic" at Strasbourg's railway station.
People consult information boards reading "No traffic" at Strasbourg's railway station. Photographer: Patrick Hertzog/AFP/Getty Images
Sept. 7 (Bloomberg) -- Bloomberg's Elliott Gotkine reports on today's strike by French unions over President Nicolas Sarkozy’s efforts to raise the retirement age. Francois Brounais, regional managing director of Haworth, also comments on the impact of the strike for employers. He speaks with Maryam Nemazee on Bloomberg Television's "Countdown". (Source: Bloomberg)
French unions struck nationwide as lawmakers began debating President Nicolas Sarkozy’s bill to raise the retirement age.
Transport workers walked off the job last night, and most schools, post offices and government offices were closed today. A total of 1.12 million people marched in protests in 137 cities across the country, the Interior Ministry said, while the CFDT union put the number at 2.5 million.
Sarkozy has vowed not to compromise on the key plank of his pension proposals, which would lift the retirement age to 62 from 60. The bid to shore up the retirement system may calm bond investors and rating services in the wake of Europe’s sovereign debt crisis.
“We are open to debate, as long as we don’t lose sight of the goal of this reform: making the retirement system pay for itself,” Prime Minister Francois Fillon told lawmakers today. “Retirement at 62 is a reasonable choice.”
Jean-Marc Ayrault, the opposition Socialist Party leader in the National Assembly, said his party wants “a fair reform that isn’t just done on the back of workers.”
Under the bill parliament is considering, the age at which full benefits can be tapped will rise to 67 from 65. The government has said it’s willing to negotiate over allowing earlier retirement for some hardship jobs and for people who began their careers as teenagers. Sarkozy’s Union for a Popular Movement has a 101-seat majority in the 577-member lower house.
The state pension fund will lose 10.7 billion euros ($13.6 billion) this year, with the shortfall reaching 50 billion euros in 2020 without a change in policy, according to the Budget Ministry.
Bond Spreads
The French government now pays about 2.6 percent to borrow for 10 years, compared with 2.9 percent for the U.K. and 2.6 percent for the U.S. Still, that’s more than the 2.3 percent paid by Germany, whose bunds set Europe’s benchmark borrowing costs. All have the highest ratings from companies including Moody’s Investor Corp. and Standard & Poor’s.
“If there are huge demonstrations, if the reforms come into political difficulty, it could become a problem for the market,” said Axel Botte, who helps oversee about 500 billion euros at Axa Investment Managers. “It is a worry.”
The French-German spread widened to as much as 55.6 basis points, more than half a percentage point, on June 8 on concern that Sarkozy was falling behind Germany in curbing debt.
“The pension reform is absolutely essential,” said Philippe Delienne, chairman of Convictions Asset Management in Paris, which oversees 780 million euros. “It’s very important for France to be credible within Europe and to show the rest of Europe that the big countries are doing their bit.”
Taxes Sought
Unions and the Socialists say taxes on capital and on high earners should be increased.
“Sarkozy cannot force people to work longer, making them pay more, while having a tax policy that favors the well-off,” said Jean-Luc Combe, a 55-year-old civil servant in a Paris suburb, marching in the capital. “If the pensions system needs more funds, he cannot only force workers to pay more. It’s unfair, he should also tax capital. He did not negotiate this, he imposed it.”
On June 24, the last strike against the pension reforms, unions estimated 2 million protesters while the police said they counted 800,000.
‘Biggest Mobilization’
“This is the biggest mobilization in years and Sarkozy must take note of it,” Francois Chereque, the head of Confederation Francaise Democratique du Travail union, said in an interview with i-Tele television during the Paris march.
The Paris metro said one of 14 lines ran normally and eight had at least one in two trains operating, with the remaining five lines running one train out of three. On the RER commuter network, line “A” had one train in two, while line “B,” which connects the airports to downtown, was virtually shut.
Just under half of the high-speed trains between Paris and provincial cities ran, the state rail network said. Eurostar to London and Thalys to Brussels ran normally. Two out of five trains to Frankfurt operated, while Geneva runs were at half service. There was no service to Italy and Spain, and night trains in France tonight were cancelled.
Trains, Planes
The SNCF, the state railroad system, said 43 percent of its workers were on strike as of 11 a.m.
France’s civil aviation authority, the DGAC, ordered airlines to cut flights in and out of the two main Paris airports by 25 percent.
Air France, the country’s largest airline, said all its long-haul flights operated, along with and 90 percent of the short-and medium-haul flights from Roissy-Charles de Gaulle airport and 50 percent from Orly, according to its website.
The Labor Ministry said in a statement that 27 percent of civil servants struck. Among teachers, strikers totalled 28 percent.
Both sides claim public opinion is with them. In a poll published on Sept. 5 in the newspaper France-Ouest, 70 percent said they supported the strikes while 53 percent thought it “acceptable” to raise the retirement age to 62. The Ifop poll questioned 957 people. No margin of error was given.
Opposition to tighter pension rules sparked extended strikes in 2003 and 2007. In 1995, President Jacques Chirac dropped an attempt to eliminate retirement privileges for transport workers after walkouts crippled the country.
France’s legal retirement age has been 60 since Socialist President Francois Mitterrand cut it from 65 after his 1981 election. Meanwhile, Germany decided in 2007 to raise its retirement age gradually to 67 from 65. Spain and Italy have also increased their retirement ages to 65 to address the squeeze of longer life expectancies and declining birth rates.
To contact the reporters on this story: Gregory Viscusi in Paris at gviscusi@bloomberg.net
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