Automobile industry expects public aid for new form of early retirement

Download article in original language : FR9908103NFR.DOC

In July 1999, the UIMM employers' organisation and the main trade unions - except CGT - concluded an agreement on a new form of early retirement for workers employed by French automobile manufacturers and their subsidiaries. The agreement is contingent on public financing of part of the cost of the pensions, a question which the government is to decide on in autumn 1999.

On 26 July 1999, the metalworking industries employers' organisation (Union des Industries métallurgiques et minières, UIMM), and the main trade unions, with the exception of the CGT, signed an agreement allowing workers employed by automobile manufacturers and their subsidiaries to retire before the the age required for entitlement to a full normal retirement pension.

The automobile industry agreement specifies that early retirement pensions are to be available to workers who volunteer to stop working as of the age of 55. They will retain their status as an employee of the company during the period of early retirement, and the employer will have the right to recall them to work up to the age of 57 - one of the points contested by CGT. Participants will draw a pension equal to 65% of their final salary until they qualify for a full retirement pension - at the age of 60 in the case of those who have worked a total of 39 years. The agreement does not specify that the employer must replace the departing older workers with new recruits - another point which CGT contests.

Bargaining on early retirement in the automobile industry has been spearheaded by the two French-owned manufacturers, Peugeot-Citroën (PSA) and Renault. Both companies signed collective agreements earlier in 1999 on introducing the 35-hour working week (FR9902157N and FR9904175N). The two agreements contain clauses specifying that workers who have attained the age of 55 will be allowed to take early retirement. The companies pledged to hire younger workers to replace departing older ones. Over a period of three years, Peugeot will allow 12, 500 older workers to retire early and hire 4,200 new recruits, while Renault will let 10,500 go and hire 3,900.

The signatories to the new early retirement agreement are counting on partial public financing of the new programme. Until early retirees reach the age of 58, their pensions will be financed entirely by the company. Subsequently, the state should finance part of the cost, but the share has not yet been specified. Application of the automobile industry agreement, and of the PSA and Renault company-level agreements, is thus contingent on decisions which the government has pledged to take in autumn 1999. In the face of European Commission decisions in 1996 and 1997 barring public subsidies designed to help a particular industry, a decision concerning new public financing of early retirement pensions will have to concern the whole private sector.

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