France's Sarkozy vows swift pensions reform

By Jon Boyle and Kerstin Gehmlich

PARIS (Reuters) - President Nicolas Sarkozy vowed to overhaul France's creaking social security system on Tuesday, but said he would consult unions to stave off mass protests that have sunk previous governments' reform attempts.

Sarkozy said the "special regimes" pensions of some workers should be brought into line with the less generous civil service scheme, with changes thrashed out over the coming months.

France's social security system was financially unsustainable and should be replaced by a "new social contract" based on the work ethic, merit and equal opportunities, Sarkozy told reporters in his first major speech on social policy.

"The system is financially unsustainable," he said. "It discourages work ... and does not ensure equal opportunities." Sarkozy said he aimed to revamp the overall pensions system during the first half of 2008.

The president, who met top union bosses at the weekend, sought on Tuesday to sweeten the pill for the country's influential unions by pledging to leave business and unions to negotiate on a firm by firm basis the nitty-gritty details.

But union leaders said workers stood to bear the brunt of the changes and threatened to call protests.

"I think this should encourage even more mobilisation because, whether it's wages or job insecurity, there is not an appropriate response to workers' expectations," CGT boss Bernard Thibault said.

Previous efforts to curb the spiralling cost of the special regimes, which allow some employees at state-controlled companies to retire as early as 50, triggered massive street protests and forced two governments in the 1990s into retreats.