Hollande Edges Toward Pensions Revamp With Offer on Tax

President Francois Hollande won support from France’s biggest business lobby for a revamp of the pension system by offering the possibility of a cut in payroll taxes to employers.

Prime Minister Jean-Marc Ayrault made the proposal late yesterday to representatives of the lobby group, Medef, in return for employers accepting an increase in pension charges. Working lives would also be lengthened as part of the package.

“The prime minister has extended an olive branch on social charges and labor costs,” Medef President Pierre Gattaz said after meeting Ayrault in Paris. If it results in a cut in charges, “I’d say, ‘bravo.”’

The remarks suggest that Hollande’s government may have overcome opposition from one key player in the talks, which are aimed at eliminating the 20 billion-euro ($27 billion) deficit facing the pension system in 2020 if no action is taken. They also underline how the Socialist president is seeking to steer the French economy toward improved competitiveness and growth.

Ayrault is holding his second day of talks with unions and Hollande’s cabinet will present its plans formally on Sept. 18. Ayrault hasn’t said how such a payroll-tax cut would be financed, though one possibility would be to raise the CSG tax on incomes. A spokesman for the prime minister declined to comment further, saying the talks are continuing.

The government has yet to win support from all unions. Thierry Lepaon, head of the CGT union, said today that Ayrault may be conceding too much to employers.

“This reform isn’t equitable in terms of the efforts asked of the bosses and workers,” Lepaon said on France 2 television. “The government is more attentive to what employers are saying. It has a right ear that is undoubtedly more sensitive than its left one.”

To contact the reporter on this story: Mark Deen in Paris at markdeen@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net

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