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Sarkozy follows Europe in raising retirement age

The French, who have the youngest retirement age in Europe, will soon have to work longer to qualify for a full state pension. As unions called a nationwide strike to defend pension rights today, the government said that France could no longer afford the retirement age of 60 – for both men and women – which has existed since 1982.

The insolvency of state pension systems, as the 1950s baby-boom generation approaches retirement, is a severe problem for all European Union countries. Deficits in pension schemes are one of the contributory factors to the immense state debts which have provoked a speculative panic on financial markets in recent days.

The problem is especially acute in France, which has the most generous retirement provisions of any European nation. The deficit in the French state pension fund, estimated at €32bn (£27bn) this year, is forecast to triple to €92bn in the next three decades unless the system is reformed.

President Nicolas Sarkozy has made pension reform the cornerstone of the second half of his presidency. He is expected to make outline proposals next month after consulting unions, employers and pensioners' pressure groups.

However, the Employment Minister, Eric Woerth, revealed yesterday that one decision had already been made. "It is the logical choice. We are going to extend the legal, retirement age," he told the magazine Paris Match.

The minister declined to say what the new retirement age would be but officials suggested that it would be increased progressively to 62 or 63 over the next few years. President Sarkozy annoyed the centre-left opposition yesterday by saying, in a private meeting of his centre-right party, that the late Socialist President, François Mitterrand, had "damaged" the French economy by reducing the retirement age to 60 in 1982. "Without that, and the 35-hour-week [introduced by a Socialist government in 2000] we would not be in the mess we are in now," he said.

Other EU governments are wrestling with similar problems. In Britain, the Conservative-Lib Dem coalition plans to "review" the retirement age of 65 for men and 60 for women.

The most drastic reforms so far have been in Greece, which has a €4bn hole in its pension fund this year. The retirement age for women will be raised by five years to match the men's of 65. Financial penalties on early retirement have been introduced and pensions have been frozen until 2012.

In Spain, President Jose-Luis Zapatero's austerity drive to save €15bn has forced the scapping of plans to increase some pensions next year. Worried about Spain's slow progress on deficit cuts, the IMF has urged the Spanish government to adopt more radical measures, such as an increase of the retirement age from 65 to 67.

The Italian government has introduced a three or six-month retirement delay for those reaching retirement age in 2011. Germany announced in 2007 that it planned to increase the retirement age, which is currently 65 for everyone. Between 2012 and 2029, the legal retirement age will be raised progressively to 67.

Germany's Employment Minister, Ursula von der Leyen, is determined to stick to the plan despite criticism from unions. "If we don't want to end up in a Greek situation, we have to work longer," she said.

Centre-right politicians in France cautiously welcomed the announcement yesterday but pointed out that many French workers were being pushed into early retirement before 60. They said that the government must also act to discourage "ageism" and persuade employers that older people could work just as effectively as younger ones. The actual average age of retirement in France is 58.8, compared to 62.6 in Britain, 61.3 in Germany and 61.7 in Greece. Only the Slovenes (58.5) retire, on average, earlier than the French.

Even before yesterday's announcement, trade union federations had called a one-day strike today to protest against any change in the retirement age or pensions contributions.

François Chéreque, the leader of the moderate CFDT federation, said that extending the retirement age was "the most unjust choice possible". The burden would fall most heavily on manual and low-paid workers, who started work younger, died earlier and could not afford – like white-collar workers – to take early retirement on private pensions.

In fact, many manual workers in the state sector – especially on the railways – retire on full pensions much earlier. French railway engine drivers have the right to take their pension at 50. In an attempt to reduce the scope of today's strike, the state railways, the SNCF, said that this, and other privileges, would remain untouched by the reforms.