The "special regimes" allow state rail and power employees, as well as some other workers, to retire early on higher pensions than the private sector.
 
Sarkozy said he would consult labour unions to prevent the mass protests that have derailed previous attempts to alter the system.

Overhauls of pension system in 1993 and 2003 left the system untouched for fear that strikes by transport and utility workers would bring the country to a halt.

In 1995, three weeks of protests forced Alain Juppe, the prime minister at the time, to abandon changes to the "special regimes".

'Financially unstable'

"We will not undertake a third reform of pensions without including them," Sarkozy said.
 
"The aim must be, at least, to align the special regimes with those in the public sector that were reformed in 2003.

'State regimes' system



About 1.1 million pensioners benefit from the scheme.

Around 500,000 workers contribute to the system.

The state funds the scheme by $6.9bn a year.

Workers in 'state regime' sectors can retire after 37.5 years rather than 40 years for other workers.

Scheme applies to rail workers and utility company employees.

Sarkozy told journalists that France's generous social security system was financially unsustainable and should be replaced by a "new social contract" founded on the work ethic, merit and equal opportunities.

"It discourages work ... and does not ensure equal opportunities," he said.
  
"The various situations that justified this or that advantage before World War II or even World War I have largely disappeared."

The "special regimes" were introduced at the end of World War II and were designed to reward people engaged in dangerous or difficult jobs, or those vital to the reconstruction effort.

Xavier Bertrand, employment minister, is expected to begin consultations with unions and business leaders from Wednesday and draw up a blueprint for change within two weeks.

Strikes threatened

The country's largest unions, the CGT and the CFDT, have demanded sector-by-sector negotiations, with the CGT threatening mass strikes if it is not fully consulted by the government.

Bernard Thibault, the CGT leader, said he was "not happy" with Sarkozy's speech, in which he also confirmed plans to relax rules on the 35-hour working work, and promised a rethink on the funding of health care.
  
"I think we are going to have to think about mobilising workers if we want to change these social policies"

Bernard Thibault, trade union leader
He called the proposals "totally unbalanced", saying they placed an unfair burden on workers, while "businesses are completely let off the hook".
  
"I think we are going to have to think about mobilising workers if we want to change these social policies," Thibault said.

Monica Queisser, a French pensions expert, told Al Jazeera it was vital for Sarkozy to show the trade unions that he is genuinely willing to compromise.

"In the last few days we have been hearing the trade union leaders saying that they are scared that there might be a fixed package already and no room for negotiations left," she said.

"If Sarkozy succeeds in getting the trade unions to have a real sense that they are being heard and that negotiations are taking place, I think things could move relatively smoothly, particularly because the general public is pretty much behind the reforms."

'Brave move'

More than two-thirds of French people say it is a "brave" move by the government, according to a recent BVA poll.

About 1.1 million people currently draw pensions under the "special regimes", funded by contributions from 500,000 workers.

The state has to pay about $6.9bn a year into the scheme because contributions fall short of payments.

The changes would affect employees of the state-owned SNCF rail company, the RATP Paris metro operator, utility suppliers EDF and GDF and some other categories of worker including members of parliament and lawyers' clerks.
 
Workers in these professions are allowed to retire after 37.5 years, instead of 40 years for others.