* Hollande aims to have pension reform voted by Dec.
* Unions meet this week to hammer out details
* President says pay-in period to rise from 2025
By Nicholas Vinocur
PARIS, June 17 Negotiations have barely begun on
a reform of France's highly indebted pension system and
President Francois Hollande is already playing down expectations
of a major overhaul.
The Socialist leader has ruled out a rise in the retirement
age from 62, indicated that preferential plans enjoyed by some
state employees will be left intact, and suggested any move to
force workers to contribute for longer will be deferred to 2025.
That risks disappointing the European Commission - which
called last month for an "urgent" French pensions overhaul - and
raises doubts as to whether a goal of eradicating a deficit due
to hit at least 20 billion euros ($26.70 billion) by 2020 will
"This is not a real reform," said Nicolas Bouzou at
Paris-based economic consultancy Asteres. "It will allow us to
bring our finances closer to a balance - to win time."
An advisory report to Hollande's government released on
Friday called for measures that ask more of workers and
pensioners, and recommended a fractional increase of employers'
Seeking to avoid the street protests which have accompanied
past efforts to revamp the pension system, Hollande has asked
France's unions and employer groups to begin talks on Thursday
aimed at reaching a consensus.
He has promised to take the outcome into account when his
government starts drafting a new pensions law from September.
The aim is to pass legislation by the end of the year.
"I'm not looking to start from scratch," Hollande, whose
failure to tackle rising unemployment has led to a slump in his
popularity ratings just over a year after being elected, told
France's M6 television in an interview late on Sunday.
Hollande said there would be no accelerated move to get rid
of existing special regimes, which allow some workers to retire
as early as 52. A 2008 reform under predecessor Nicolas Sarkozy
that winds down such privileges was sufficient, he argued.
Moreover, there will be no move to align arrangements for
calculating public sector pensions with private sector ones.
That is a hot potato in France because state workers'
pensions are based on their final six months' earnings and not
those of the last 25 years as for private sector employees - a
rule many think favours those in the public sector.
Hollande has said one option was to lengthen the pay-in
period beyond 41.5 years for all workers - but suggests this
would only kick in gradually from as late as 2025.
"I do no think there are many people on the financial
markets who are convinced we can wipe out the shortfall in
2020," Dominique Barbet, analyst at BNP Paribas bank said.
Asteres' Bouzou and Amandine Brun-Schamme, economist with
economic policy think tank Coe-Rexecode, agreed.
"It needs to be dealt with immediately, "said Brun-Schamme,
dismissing official forecasts of a 20-billion-euro shortfall by
2020 as optimistic and estimating it would be double that.
Hollande has raised the possibility of increasing employee
contributions, but economists say that would add to labour costs
and eat into households' dwindling purchasing power.
So far, he has not said publicly whether companies will have
to pay higher pension contributions - a move the EU Commission
has explicitly warned against.
While hardline unions CGT and FO have warned of strikes if
changes affect public sector workers, the leader of the
reformist CFDT said he favoured a far-reaching overhaul.
"The CFDT is in favour of a systemic reform," Laurent Berger
told France Inter radio. "But, apparently, that's not what's
being considered -- the country may not be ready for it."
Polls suggest otherwise. A survey in May showed two thirds
of the French favoured a major overhaul, and another in June
showed 64 percent felt Hollande was reforming France too slowly.
"All of this takes a lot of time for what is not really a
reform, but parameter adjustments that are not very complex,"
said Bouzou. "In another country, it would be done in a month."