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The following article was published in our article directory on November 16, 2010.
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Strike Appear French High Welfare Pain

Article Category: Business

Author Name: xia zihui

Recent times, protracted strikes in France shocked the world. The origin of the strike, the government should reform the retirement system. Reform of the French touch is not only proud of the long-term welfare system, the vital interests of many people.

The face of pressure, French President Nicolas Sarkozy 9 retirement system reform bill has been signed, the international public opinion in France is expected to reproduce the large-scale strikes in the future.

High welfare or bad? This topic has once again become a global economic circles, and even a hot topic politics.

France: an unbearable burden

This year in July, the French government presented the draft reform of the retirement system. Its core content is: to extend the statutory retirement age from 60 to 62 years of age, the retirement age to receive full pension increased from 65 to 67 years to pay pension age from 41 years upwards to 41.5 years. French Senate and National Assembly to withstand the pressure to strike, in October has passed the retirement system reform bill.

Life expectancy in the population, aging increased, and the context of weak economic growth, the French government that the pension system reforms. Otherwise, France will go bankrupt.

In 1945 the French social security system, the average life expectancy was 65 years old; and today, that figure has reached 78 years of age. Official data show that the total French population of about 64.7 million, of which 23.8% retired the next 20 years there will be 250 million people in retirement. France in 2010 was about 32.3 billion euros pension shortfall, if not reform the retirement system, this figure will reach 42.3 billion euros in 2018.

High-welfare systems need to maintain high taxes, but this is high taxes in France. Sarkozy said the French tax in 2008 gross domestic product (GDP) reached 42.8% share, well above the euro area and the EU average.

The need for higher taxes for the support of powerful economic strength. In fact, the French economy has been sluggish in recent years, the financial crisis is to further slide into the doldrums. Data show that the French economic growth rate in 2009 was negative 2.5%, the fiscal deficit has soared to 144.8 billion euros, accounting for 7.5% of GDP; public debt of 1.489 trillion euros, accounting for 77.6% of GDP, are significantly more than the EU "stability and growth pact "under 3% and 60% limit. According to the latest data from the second quarter of 2010, France's public debt soared to 56 billion euros chain, has reached 82.9% of GDP.

Greek sovereign debt crisis, the French sounded the alarm. To avoid bankruptcy and by the European Union "excessive punishment", the French government to drastically cut the deficit. But to reduce the deficit and debt, revenue and reducing expenditure only two ways, since the open-source can not, but to cut expenditure, the budget reform amazing retirement system to become the first choice.

Public opinion generally believes that the retirement system reform, the French opened the prelude to a series of economic reforms. Next, the Government may continue to promote the employment system or medical system reform.

EU: Reform of the general trend

Data show that all EU member states deficit last year, Ireland's deficit as a percentage of GDP, 14.4%, Britain, Spain and Latvia more than 10%. Meanwhile, the EU member states the overall debt situation is quite serious, including Italy's debt this year, even up to 116% of GDP.

The debt crisis, forced the euro-zone countries and the International Monetary Fund, respectively, out of 110 billion euros and 750 billion euros emergency. The EU believes that an important reason for the crisis lies in borrowing member countries to maintain high welfare wantonly. In order to avoid widening crisis, EU leaders summit in the autumn in Brussels late last month by the EU economic governance reform program, strengthening the EU fiscal discipline. To do this, cut the deficit, fiscal austerity to become EU member states have generally adopted the response.

Fiscal discipline to force Member States, the European Commission to propose in violation of fiscal discipline and punishment if they refuse to Member States, unless the majority of EU member states in order to effectively oppose, or penalties into effect automatically.

The EU summit meeting, to the outside world sent a clear signal: the EU sooner or later have to be a financial reorganization. Under high pressure in the EU, countries no return, welfare reform is imperative.

In fact, early retirement system in France before the reform to promote a strong, more than ten years ago, Germany began to tax, retirement system and relief system reform. The UK also announced after the subprime crisis the largest in nearly a decade the reduced budget speech, will cut 500,000 public sector jobs and extend the retirement age. In addition, Greece, Spain, Italy, Ireland and other countries have also put forward their own responses.

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