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(CNN) --
The French government plans to raise the official retirement age by two years as part of a long-overdue reform of the country's pension system that prompted unions to call nationwide strikes next week.
The new legislation will require French citizens to work until the age of 64, up from the current 62, to be entitled to a full pension.
Starting in September of this year, the regular retirement age will increase by three months a year until 2030.
French Prime Minister Élisabeth Borne at a press conference in Paris to present the government's plan for pension reform on January 10, 2023. (Bertrand Guay/Pool/AFP/Getty Images)
A higher retirement age should address a pension funding gap, Prime Minister Élisabeth Borne told reporters on Tuesday as she unveiled the reforms.
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"I am well aware that changing our pension system raises doubts and fears among the French," he said, but added that allowing the deficit to grow would be "inescribable."
The proposed reforms will generate about 17.7 billion euros ($19 billion) annually by 2030, Finance Minister Bruno Le Maire said at the news conference.
Other changes announced by Borne include increasing the minimum monthly pension and counting maternity leave as part of a woman's working years.
Those who started working before the age of 16 will have the right to retire at 58, she said.
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Beginning in 2027, a person must have worked for 43 years to receive full state pension benefits.
The renewal of the pension system has been a key element of the electoral campaigns of President Emmanuel Macron.
“The aim is to consolidate our pay-as-you-go pension plans, which would otherwise be threatened as we continue to finance on credit,” Macron said in a New Year speech.
An earlier attempt by Macron to revamp the pension system was met with national strikes in 2019 before being abandoned during the covid-19 pandemic.
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Unions had already vowed to oppose the new law, and were quick to react to Tuesday's announcement by calling for "a first day of strikes and protests" next week.
“January 19 is the launch of the mobilization to prevent the reform from taking action and push the government back,” Laurent Berger, secretary general of France's largest union, the CFDT, told reporters on Tuesday.
"Nothing justifies such a brutal reform," he added.
Workers in France have come under pressure from rising food and energy bills, and thousands took part in mass demonstrations against the cost of living on the streets of Paris last year.
Strikes by workers demanding higher wages caused fuel pumps to run dry across the country a few months ago.
French President Emmanuel Macron.
(Gonzalo Fuentes/Reuters)
The French will continue to retire earlier
France spends more than most other countries on state pensions, at almost 14% of GDP in 2018, according to the Organization for Economic Cooperation and Development.
In 2019, it had the highest welfare spending of all European Union countries at almost 34% of GDP, according to Eurostat.
That compared to 28% across the European Union.
The government argues that the changes are necessary for the system to be financially sustainable.
“Government agencies are predicting massive deficits for years to come as boomers continue to retire and they need to make changes very quickly, otherwise they will lose money to invest elsewhere,” said Renaud Foucart, a Lancaster University economics professor in England.
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Raising the retirement age to 64 will keep France below the norm in Europe and many other developed economies, where the age at which full pension benefits apply is 65 and getting closer. More at 67.
In the United States and Great Britain, the retirement age is between 66 and 67, depending on the year of birth.
Current legislation provides for a gradual increase to 68 in Britain between 2044 and 2046, although that is under review and could change.
Even so, the pension reform in France is “very unpopular”, according to Foucart.
"It's seen as a taboo," he added.
Passage of the reforms is all but assured, despite the fact that Macron's party lacks an absolute majority in the French parliament.
In the absence of support from opposition lawmakers, the government could resort to Article 49.3 of France's constitution, a mechanism it has already used several times to push through budget-related bills without putting them to a parliamentary vote.
— Marguerite Lacroix contributed to this report.
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