French employees carry union flags and banners during a demonstration in Paris to protest the government's plan to reform the minimum age of retirement on Tuesday. ((John Schults/Reuters))

France is to raise the retirement age from 60 to 62 in 2018 in an effort to get the country's spiraling public finances under control, the labour minister said Wednesday.

Eric Woerth called the measure — already strongly opposed by the opposition Socialist Party and labor unions — a "real moral obligation," given France's burgeoning deficit and its aging population, which he said threatens the viability of the money-losing pension system.

The French budget deficit was at 7.5 per cent of gross domestic product last year. The conservative government has vowed to bring it under three per cent — the threshold set by the European Union — by 2013. The Greek crisis has given added urgency to France's plans to cut back.


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Woerth said the reform will bring France more into line with other European countries, which have raised retirement ages and taken other measures to slash budget deficits.

Still, the French measure pales in comparison with more drastic changes elsewhere in Europe. Germany, for example, is to gradually raise its retirement age from 65 to 67, starting in 2012 and wrapping up in 2029.

"There is no magic in terms of pensions. We cannot at the same time promise to work less long and not have a deficit," Woerth told journalists. "If we want end our pension system's debts, working longer is unavoidable."

The reform will save nearly $29.3 billion US in 2018 and should bring the pension system back into the black that year, Woerth said.

He pledged the measure will be "responsible and fair," affecting workers in the public and private sectors in equally. It is to be instituted progressively, and will also stretch out the number of years people have to work to win full pension payments, Woerth said.

The cabinet is to discuss the proposals in July, and they are expected to go before parliament next autumn.

Even before Wednesday's announcement, the measure had sparked angry reactions from Socialist lawmakers and unions. On Tuesday, tens of thousands of people marched through Paris to protest the plans. Larger protests and strikes are likely starting in September, once much of the country returns from summer vacation.

Last month, President Nicolas Sarkozy announced that tackling 30 years of accumulated deficits is now a "national priority."

Other recent measures aimed at getting the deficit under control include a three-year spending freeze and a crackdown on tax loopholes.