* EU ministers back Commission recommendation for France
* Paris says Commission cannot "dictate" policies
By Ingrid Melander
LUXEMBOURG, June 21 European Union finance
ministers told France on Friday to revamp its pension system by
year-end and cut labour costs in return for getting longer to
shrink its budget deficit to within EU limits.
The ministers backed the European Commission's detailed
recommendations on how France should proceed with those reforms,
despite Paris's instance that Brussels cannot "dictate" its
The euro zone's second-largest economy agrees it must
balance its costly pension system's accounts by 2020 and regain
lost competitiveness to exit a shallow recession and combat high
But recommendations by the Commission, the EU executive,
last month on the details of the reforms, and especially the
pension system, hit a raw nerve, with President Francois
Hollande insisting France would go at its own pace.
EU finance ministers underscored the same message as the
Commission on Friday, saying possible measures included
increasing full-pension contribution periods and reviewing
special schemes while avoiding an increase in employers' social
"The pension system will still face large deficits by 2020
and new policy measures are urgently needed to remedy the
situation," finance ministers said in a statement.
France was also urged to simplify its tax system further,
lift restrictions to closed professions, rein in public spending
and urgently reform the unemployment benefit system.
EU finance ministers gave France, as well as Spain, Poland
and Slovenia two more years to bring their deficits below the
EU's 3 percent of GDP cap, as recommended by the European
Commission, as the EU shifts its focus to structural reforms to
boost growth after three years of deep spending cuts.
The Netherlands and Portugal got one extra year, and Hungary
and Italy were removed altogether from the EU's "budget watch"
list, along with Romania, Latvia and Lithuania.
Belgium, however, was told to bring its deficit under 3
percent Of GDP this year.
France has repeatedly stressed it has already put reforms in
motion and would continue at its own pace with the steps, which
include seeking deals between unions and employers to reach as
broad a consensus as possible and avoid street protests.
Hollande kicked off on Thursday consultations with labour
unions and employers' groups on the pension reform, with a draft
law due around September.
The two-trillion-euro French economy, dogged by subdued
consumer demand and weak business investment, will shrink by 0.1
percent after posting zero growth last year, INSEE statistics
office said on Thursday, dashing Hollande's hopes of cutting
down unemployment this year.