'No austerity plan', Sarkozy tells unions

France is not implementing an austerity plan as fellow EU members have done, French President Nicolas Sarkozy told union leaders gathered at the Elysée presidential palace on Monday.

“Some people would like to see a similar response in [France’s] fiscal policy,” the French president said in reference to austerity measures being enforced in Greece and Spain, but countered that he himself was “against this opinion”.

“We should not implement a stringent policy, but a responsible policy. It’s our credibility that is at stake,” Sarkozy added.

Sarkozy’s comments on Monday came at a much-awaited “social summit” to review recent government reforms aimed at combating the economic crisis and limiting its impact domestically.

The talks were scheduled months ago, but a recently announced public spending freeze threatened to overshadow the summit.

Last Thursday, French Prime Minister François Fillon announced that the government would freeze public spending between 2011 and 2013 to bring its deficit to within the three percent required by the EU.

Unions fear the government will scrap welfare measures that shield low-income families from the harsher effects of the economic downturn.

Before the meeting, France’s main unions CGT, CFDT, Unsa, FSU and SUD issued a joint statement warning against “deficit reduction measures that would lead to greater social inequality”.

Pensions deferred

At Monday's meeting, Sarkozy confirmed fiscal measures meant to target unemployment and support small businesses. The president announced payroll tax exemptions for new hires in businesses with fewer than 10 employees.

The 2.6 billion euros in tax support and incentives paid last year to low-income households could be revised downward in the future.

Government spokesman Luc Chatel said on Thursday that the sweeping cuts would affect "all French people". He did say, however, that there would not be a "massive rise in taxes that would choke the economy".

The prickly issue of pension reform, which Sarkozy made a top priority for 2010, was briefly invoked Monday. In an unexpected move, Sarkozy said the state would shore up its pensions system with new levies on France’s highest earners and on company profits.

He failed to give specific details, saying the Ministry of Labour would publicly revisit his proposals next week.

The government expects unions to fiercely resist any rise in the legal retirement age, and will not discuss the issue until a panel of experts (COR) charged with reviewing the pension system delivers its conclusions.