Corporate France Urges Macron to Delay Contentious Pension Reform

(Bloomberg) -- France desperately needs pension reform, just not right away.

That's the message for President Emmanuel Macron from a chorus of top business leaders, days before he's set to announce whether he'll attempt change before the 2022 election.

“There's already a great deal of worry and uncertainty. It would be a gamble to add more,” Stephane Richard, chief executive officer of telecom giant Orange SA told Bloomberg News on the sidelines of a conference in Aix-en-Provence. “If it was me, I wouldn't do it.”

Macron's first attempt to repair the country's system and fulfill a 2017 campaign pledge triggered strikes and helped fuel months of violent demonstrations before being cut short by the pandemic. Now that the economy is staging a comeback, many business leaders are wary of once again rocking the boat.

The 43-year-old French leader is preparing to unveil his priorities for the rest of his term, and is scheduled to meet with labor leaders about pensions on Tuesday. The question is whether he'll gamble that raising the retirement age or proposing other, broader changes to the pension system should be among them.

“Pension reform should be engineered now and implemented only after the 2022 election,” said Air Liquide SA Chief Executive Officer Benoit Potier, who was also attending the conference in Aix-en-Provence.

Two other chief executives of CAC-40 companies concurred, adding that the president lacks the political capital to pass major changes, so any measures would necessarily be watered down. The head of the country's Medef business lobby, Geoffroy Roux de Bezieux, has also come down in favor of holding off.

Still, government heavyweights including Finance Minister Bruno Le Maire, Labor Minister Elisabeth Borne and Industry Minister Agnes Pannier-Runnacher have begun defining the need for change.

“Pension reform is needed in France,” Borne said in an interview at the conference. “That said, the president has himself said that what's at stake for us is supporting the economic recovery and creating the maximum number of jobs, so we will have to assess the right timing.”

Government spokesman Gabriel Attal on Monday said a reform is possible before the election.

“One thing we're ruling out is putting France on hold for 10 months,” Attal said on France Inter radio, adding that a decision will come soon.

Macron, who's expected to run for re-election in 2022, has suffered setbacks in recent weeks including a poor showing in regional elections and the slamming by a top court of his planned overhaul of unemployment benefits.

There's also debate within his government over whether he should remain loyal to the reform agenda that got him elected, or avoid angering voters with so little time left before the election.

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“Everything is on the table,” Borne said. “We need to look at how we would do this.”

In his first attempt at reform, Macron tried streamlining France's convoluted pension structure, which has separate systems for 42 different professions.

That's still necessary, Borne said, as having different rules is “unfair” and maintains rigidity in the labor market at a time when people increasingly need to switch career tracks.

The French must also work longer to re-balance the pension system, she said.

To be sure, not all business leaders are urging caution. Axa SA CEO Thomas Buberl urged the president not to delay.

Waiting another year “means 10 billion euros ($11.9 billion) of additional budget,” he said.

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