PARIS (Reuters) – The government is exploring new ways to balance France’s costly pension budget should President Emmanuel Macron decide to forge ahead with pension system reform before the end of his mandate in 2022, two sources familiar with the discussions said.

One of the options being studied is to increase the legal retirement age by two years to 64 – something the government stopped short of in its now-shelved reform proposal – and increasing the minimum state pension as a sweetener, the sources said.

The sources both said any overhaul of the pension system, one of the most generous among industrialised nations, would depend on the health of the economy and the wider social context as France emerges from the coronavirus epidemic.

Pension reform was a central pillar of Macron’s drive to create a more flexible and competitive labour market, while also reducing its financial burden on the state coffers.

The president last week said his planned revamp of the pension system, which infuriated trade unions and prompted weeks of transport strikes before it was later shelved when the pandemic struck, could not go ahead as planned.

That initial proposal included replacing dozens of sector-specific regimes with a universal, points-based system. While most workers would not be able to collect a full pension immediately if they retired before 64, the legal age was to remain at 62.

“There is within government strong concern about the state of our finances and the very heavy indebtedness of the country as it exits the health crisis,” one of the sources said. “One of the biggest chunks of spending, and one of the easiest ways to recuperate a bit of money, is pensions.”

France’s public deficit hit 9.2% in 2020 as the government spent heavily to shore up activity and save jobs during the pandemic.

The pension budget recorded a deficit of 18 billion euros ($21.9 billion) due to a sharp decline in contributions as the economy slumped, the independent pension advisory body COR said.

COR projected the pension system would not return to a balanced budget until the mid 2030s without reform.

While the shelved reform was convoluted and complex, increasing the legal age of retirement would be a quicker fix, although deeply unpopular with swathes of the electorate.

“Can we leave things as they are for our children? No,” Macron said on Tuesday while visiting the Drome region.

($1 = 0.8213 euros)

(Caroline Pailliez; Writing by Richard Lough)