French Prime Minister unveils pension changes, unions call for strike
PARIS | French Prime Minister Elisabeth Borne on Tuesday unveiled a controversial pension overhaul aimed at raising the retirement age from 62 to 64 by 2030, prompting vigorous strike and protest calls from opponents of the left and the unions.
Speaking at a press conference in Paris, Borne said the minimum retirement age to qualify for a full pension will be gradually increased by three months every year, starting this year, in accordance with a long-standing commitment by President Emmanuel Macron.
Additionally, people will need to have worked for at least 43 years to get a full pension, starting in 2027, she said.
“Working more will allow future retirees to obtain higher pensions,” Borne said.
“By 2030, our system will be financially balanced,” she added.
Those who started working before the age of 20 will be eligible for early retirement, Borne added. Certain categories of workers such as police officers and firefighters will also be able to retire earlier.
The government argues that the French are living longer than before and therefore need to work longer to make the pension system financially viable. All French workers receive a state pension.
Centre-left and far-left unions expressed unanimous disapproval of the proposed changes after talks with Borne last week. Some are more in favor of an increase in employee contributions paid by employers.
The eight main unions in the country have announced a national day of strikes and demonstrations on January 19.
Laurent Berger, boss of the CFDT union, denounced “one of the most brutal pension reforms of the past 30 years”. Philippe Martinez, general secretary of the CGT union, urged the workers to “strike that day and the following days”, adding that the union is “committed to preventing the adoption of this bill”.
A heated debate in parliament is also to be expected, starting next month.
Macron’s centrist alliance lost its parliamentary majority last year – and most opposition parties are opposed to the changes.
Borne pledged to seek a “compromise” with other political groups. Macron’s centrist lawmakers hope to join forces with members of the conservative Les Républicains party to push through the measure.
The president of the group Les Républicains au Sénat, Bruno Retailleau, was satisfied with the changes envisaged, declaring on Twitter that “the reform proposed by Elisabeth Borne echoes that which we vote in the Senate”.
Alternatively, the government can use a special power to force the law through parliament without a vote – at the cost of much criticism.
Pension reform is an election promise from Macron, who failed to implement a similar measure in his first term. The proposal at the time sparked nationwide strikes and protests, before the COVID-19 crisis caused the government to postpone the changes. Macron was re-elected for a second term last year.
France’s Pensions Advisory Council published a report last year showing that the pension system is expected to run into a deficit over the next decade, with the government having to compensate.
The main employers’ union of MEDEF in France published a statement welcoming “an essential reform to save our pension system”.
The minimum retirement age applies to people who have worked enough years to be eligible. Those who do not meet the conditions, such as many women who interrupt their careers to raise their children and those who have had a long education and started their careers late, must work until the age of 67 to retire without penalty.
The average pension this year is $1,500 a month after taxes are deducted. But this average hides differences between pension schemes depending on the profession.
Borne said the reform will allow the minimum state pension for low-income workers who have a full career to increase by $107 on average, to around $1,288 a month.
Over the past three decades, French governments have made numerous changes to the system, but each reform has sparked mass protests.
California faces $22.5 billion budget deficit, Governor Newsom says
SACRAMENTO, California | California faces a projected $22.5 billion budget shortfall for the coming fiscal year, Governor Gavin Newsom announced Tuesday, just days into his second term. That’s a sharp turnaround from last year’s $98 billion surplus.
The deficit, while unsurprising, could signal the end of a decade of economic growth in the country’s most populous state.
Newsom, a Democrat, proposes to fill the hole by delaying spending in some areas and changing how others are funded. His budget appears to avoid major cuts to most major programs, though it cuts proposed spending on climate change initiatives by about $6 billion. The state hopes to restore those expenses in 2024 or offset them with federal money.
Among his climate maneuvers: he will shift $4.3 billion in spending on zero-emission vehicles from the general fund funded by state taxpayers to a special fund paid by polluters. It also delays $3.1 billion in climate and transport funding by one year.
The state still has about $35.6 billion in reserves.
Newsom stressed that California will continue its heavy spending on public and higher education, climate change, health care, and drought and wildfire response.
“We keep our promises,” he said.
Newsom’s presentation offers a first look at his spending and political priorities as he launches his second term, but it’s not the final word on how the state will distribute the money. He will reassess state finances in May after tax revenues come in, and he will sign off on a final budget in June.
The California Republican Party quickly lambasted the proposal, saying Newsom had failed for years to adequately address issues such as homelessness and wildfires despite record spending.
“Now, with a massive budget deficit projected, it’s time for Gavin Newsom to finally look at smarter spending to address the many issues plaguing our state and keeping longtime residents away,” the party chair said. Jessica Millan Patterson, in a statement.
Newsom’s proposed cuts in climate spending, including in programs designed to boost zero-emission vehicles, have drawn criticism from some of his traditional environmental allies. Budget slashes hundreds of millions of dollars in spending on programs to expand zero-emissions vehicle infrastructure in low-income neighborhoods and move delivery trucks, planes, railroads and other sources away transport of greenhouse gases.
“Investing in climate solutions is the only way to ensure a better California for everyone who lives here,” said David Weiskopf, senior policy advisor for climate group NextGen California.
His proposed budget isn’t all cuts — Newsom wants to give an extra $1 billion to local governments to tackle homelessness, though he wants greater accountability from local leaders. In the fall, he threatened to cut funding for such programs. He also proposed spending more on cash assistance programs for low-income and disabled Californians.
Other ways to fill the spending hole, including withdrawing $3 billion intended to help the state deal with inflation.
Newsom has been warning of a potential budget shortfall for more than a year, and the Office of the Legislative Analyst said in November the shortfall could be around $25 billion.
In September, Newsom publicly chastised lawmakers for sending him dozens of bills that, when added together, would have enabled billions in new spending. Newsom vetoed those bills, saying it “made it clear that we are seeing economic headwinds.”
Facing a deficit will be a change of pace for the state, where spending has more than doubled in the 10 years since the last recession. Authorities have launched a dizzying array of new programs and services, including pledging to pay for all 4-year-olds to attend kindergarten and agreeing to cover the health expenses of all low-income immigrants who live in the country without legal permission.
The money is mostly coming from a booming stock market that has kicked off a parade of California-based tech companies. These companies – including Uber, Airbnb, Lyft and Pinterest – have made many people very rich, creating a new class of millionaires and billionaires in a state with a progressive tax code where nearly half of all income taxes come from the top 1% of employees.
Since then, numerous economic factors – led by runaway inflation, supply chain disruptions and Russia’s invasion of Ukraine – have had a crippling effect on the economy. The S&P 500, a key indicator of the health of US stock markets, has fallen more than 18% since its peak in late 2021.
The rich don’t make as much money, so they pay less tax in the state of California. So far this year, California’s tax revenue has been $4.6 billion below expectations, not including some one-time corporate tax payments that state officials say they can’t count on. .
Money from capital gains taxes is expected to make up about 5.5% of state revenue, up from 9.75% last year, Newsom said.
Still, California appears to be well positioned to weather an economic downturn. Of the $131 billion in general fund surpluses the state has had over the past four years, the bulk – about $80 billion – has paid for things that don’t require ongoing funding, like building projects. According to the Office of the Legislative Analyst, only $10 billion of overspending paid for outstanding commitments.
Constitutional limits prevent lawmakers from draining reserves to cover a deficit. And unlike the federal government, California’s budget must be balanced. Newsom and lawmakers will have to tighten state spending to cover all the shortfall — something Senate Budget Committee Chair Nancy Skinner said is doable.
“We’ve funded things at record highs, and a lot of the programs we’ve funded haven’t even started yet, so we still have room to make some adjustments if needed,” she said. “I am very optimistic because we are in good shape.”
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