France's retirement age will be raised from 60 to 62 over the next eight years as part of sweeping pension reforms, the government has announced.
French labour minister Eric Woerth told reporters that working longer was "inevitable", and necessary to balance the public finances.
The move is designed to reduce France's pension costs and bring public borrowing down.
The move is likely to be met with stiff resistance from labour unions, however.
Demonstrations against raising the retirement age were seen even before the measure was formally announced, with more strikes and protests expected in the coming months.
But Mr Woerth said it was time for France to follow the lead of other European countries in addressing its deficit.
"All our European partners have done this by working longer. We cannot avoid joining this movement," he said.
France's growing budget deficit currently stands 7.5% of GDP - far above the 3% target set by the EU but much lower than some EU members including the UK, Greece, Portugal, Ireland and Spain.
Meanwhile the country's annual pension deficit is expected to total 32bn euros (£26.7bn; $39.5bn) this year, and could rise to as much as 114bn euros by 2050 without reform.
Under current rules, both men and women in France can retire at 60, providing they have paid social security contributions for 40.5 years. Meanwhile, public sector workers retire on 75% of their final salary.
As well as raising the retirement age to 62, the planned reforms will also require employees to work for a minimum of 41.5 years to qualify, and there will be higher taxes on the better paid.
Those who began working before the age of 18 would continue to retire at 60, however, and those with particularly "arduous" jobs may also be able to retire earlier.
The reforms were broadly welcomed by analysts, but several warned that further changes would be needed if France was to successfully balance its books.
"What we have today is definitely not the last reform of the pension system," warned Gilles Moec, Europe economist at Deutsche Bank.
But opposition leaders condemned the proposals.
"This is the most unfair reform to have been decided by the president ... Nicolas Sarkozy has decided to make the poor pay," said Francois Hollande from the French Socialist Party.
The proposals must still be agreed by the French parliament in a vote in September.
They are likely to be fiercely resisted by labour unions and opposition parties before then.
Last month, widespread strike action in protest at the plans drew tens of thousands of workers to demonstrations in Paris.
The BBC's correspondent in Paris, Christian Fraser, said the government was preparing for "a summer of industrial action".
But he pointed out that recent opinion polls had shown a majority of the French public were in favour of raising the retirement age.