France’s Senate approved President Nicolas Sarkozy’s bill to raise the retirement age by two years as labor unions promised to maintain their protests for an eighth week.
Lawmakers in the Sarkozy-controlled upper house of Parliament voted 177 to 153 late yesterday, clearing the way for final passage. A comparable measure was approved by the National Assembly on Sept. 15. A panel comprising members of both chambers is scheduled to meet Oct. 25 to merge the bills.
“Once a law is approved it must be applied,” Labor Minister Eric Woerth told Le Figaro in an interview published today as unions called for a seventh strike the day following the Oct. 27 final vote. “The stakes goes beyond pensions: it’s about France’s image and our ability to go pass our old demons, get over immobility.”
Senate passage of the bill won’t quell opposition to the plan to raise the retirement age to 62 from 60 and the age for a full pension to 67 from 65. Protests have disrupted transport and shut oil refineries, leading to fuel shortages.
Sarkozy has refused to retreat from the plan that would bring France closer to Germany and the U.S., which are moving toward setting 67 as the full-retirement age, according to the Organization for Economic Cooperation and Development.
The retirement overhaul is needed to balance the pension system’s budget by 2018, Sarkozy says. The changes are part of his effort to reduce the total deficit. This year, the gap will stand at 7.7 percent of gross domestic product and Sarkozy plans to cut it to 6 percent next year.
Since the unions’ first protest strike, the risk premium on French bonds has increased. Investors demand 40 basis points more to buy 10-year French bonds than comparable German securities, against 30 basis points on Sept. 6.
Union spokesmen and the opposition Socialist Party said the law should not be enacted and demanded the government craft a new pension overhaul plan. Violence broke out at protests this week, prompting Sarkozy to threaten a crackdown on “rioters.”
Speeding the Vote
Sarkozy also ordered striking staff at Total SA’s Grandpuits refinery southeast of Paris, one of the 11 that have been shut by protests, back to work yesterday.
Transport Minister Dominique Bussereau said today the Paris region and western France are most hit, with about 35 percent of the service stations being disrupted. He added, in an interview with Europe 1 radio, that highway stations are functioning properly, as French people started yesterday the All Saints week-long holiday.
Seeking to mute the disruptions, the government moved to speed parliamentary passage of the bill, invoking a rule that allows the Senate to cast a single vote on the legislation and 200 remaining amendments.
“See you at the next elections,” Socialist Senator Jean- Pierre Bel told the majority Union for a Popular Movement in the debate. “What you are doing with pensions is going to stick to you like glue.”
The effect of the disruptions on France’s economy “is not significant,” said Laurence Boone, an economist at Barclays Capital in Paris.
“For the moment nothing is dramatic but we’re at a crossroad. If the protest continues, it will be very difficult,” Jean-Francois Roubaud, the head of the small and medium business group told Le Parisien daily. “We can’t afford being blocked by this social protest,” he said.
A 22-day strike in 1995 cut 0.2 percentage points from GDP for one quarter. “To date, there have been only a few days of strikes, and these were not observed 100 percent” as a result of a law that requires minimum service levels in key industries and that didn’t exist in 1995, Boone said.
The French Chemical Industry Union said in a statement it is losing “100 million euros ($140 million) a day” because of the strikes, without giving details.
Jean-Louis Schilansky, head of the refiners’ group Union Francaise des Industries Petroliers, said today that France is currently importing about 100,000 tons of fuel daily, compared with 20,000 to 25,000 tons in normal days. “The situation in France starts having an impact on markets, costs a getting higher,” he said, Le Point weekly’s website reported.
Environment and Energy Minister Jean-Louis Borloo told reporters yesterday that “no refinery is working in France,” forcing the state to order “massive imports.” The country’s 12 crude-processing plants have ceased working since Oct. 12.
Air France has lost 25 million euros in revenue. Thierry Gregoire, president of hotel federation UMIH, said on BFM that cancelations are running 50 percent above normal.
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