French President Emmanuel Macron is pushing ahead with pension reform despite days of strikes from outraged citizens. Though willing to soften and delay some of the changes, Macron insists that reform will go through as part of an overhaul on social systems – something he pledged to accomplish when elected in 2017, and which led to the Yellow Vest protests last year.
France has one of the most generous pension plans in Europe and the OECD nations, but the system has major budget shortfalls. Currently, pensions take up 14 percent of France’s economic output, making it among the most expensive in the world. If nothing changes, the system is forecast to run a deficit of more than 17 billion euros by 2025.
What Are the Proposed Reforms?
France’s official retirement age is 62, but the 42 different pension systems operating within the country enable some to retire in their fifties – up to a full decade earlier. Offering some of the earliest retirement ages in the OECD countries, French citizens are deeply reluctant to raise it. One possible reform under consideration would leave the current age in place, but tie in additional benefits for those who keep working longer.
Currently, pension benefits are based on a worker’s 25 highest earning years in the private sector, and the last six months in the public sector. A points-based system that merges the current public and private systems together would be fairer and simpler, Macron argues, as well as put pension funding on sounder footing as the population ages.
Many unions fear this will erode some of their worker’s privileges, however. Currently, the state makes up for the shortfall between actual worker contributions to the pension and the entitled pay-outs, and there is concern that this will cease to be feasible in the future. Unions are also apprehensive of losing their input on contributions and benefits in a centralised, points-based system.
There is still discussion over which age groups will be impacted by the reforms and when, in an effort to further soften the planned reforms. Historically, attempts at pension reform have been both widely opposed and successfully derailed.
Macron will present a draft of the reform this week, and parliament plans to vote on the proposal in early 2020. In the meantime, Prime Minister Edouard Philippe is trying to float a compromise between outraged workers and the government.
“The government is determined to build a universal pension system…but we will take the time we need to get there”, Prime Minister Edouard Philippe told a news conference, adding that he favours a gradual transition over an immediate one. Philippe has also said that he prefers to install a “grandfather” clause so that the reforms only impact those born after 1963, with the new system kicking in for those who enter the labour market after 2025. Either way, the end of special pension regimes is coming. “The system of corporatist solidarity is no longer suitable for this day and age and has created injustices”, Phillippe said.
“I am determined to take this pension reform to its completion”, Philippe told Journal du Dimanche newspaper. “If we do not implement a thorough, serious and progressive reform today, someone else will do one tomorrow, but really brutally.”
“The reform we’re putting into place is fair”, said the Economy Minister, Bruno Le Maire, on Sunday.
Public opinion on pension reform is evenly divided. A survey by Elabe, a French polling agency, shows that more than half of citizens are concerned about the sustainability of the pension system. An Ifop poll released on Sunday showed that 53 percent of French people supported the strike, and polls earlier this month indicated that while a majority support pension change, most do not trust Macron to do it fairly. The political challenges that stand in the way of reform remain significant.
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Massive protests that broke out on December 5th are still going strong in what’s shaping up to be the biggest challenge to Macron and Phillippe since the Yellow Vest remonstrations last year. Thursday’s first protest attracted 65,000 people in Paris and 806,000 nationwide, according to police figures. However the CGT, the largest labour union opposed to the pension reforms, believe the figure was closer to 1.5 million. Attendees mostly included public sector workers like railway workers, teachers, and emergency room medics, though a number of private sector employees joined in as well.
Meanwhile, transport systems around Paris have been paralysed due to strikes, with buses, the Paris metro, and the regional rail running at only 15 percent of normal service and leaving thousands across the country unable to get to work. Traffic lines to get into Paris on Monday morning totalled over 500 kilometres. Meanwhile, many schools have closed and shops remain empty as skittish tourists and residents avoid the centre of town, harming small businesses.
Though the protests have largely been peaceful, violence has broken out in a few locations around the capital. Demonstrators smashed store windows in Rennes and police used tear gas on crowds in Nantes, as scuffles between police and protesters ensued in Lyon.
While these protests are not necessarily a continuation of the Yellow Vests from last year, they reflect deep social discontent and economic anxiety centred around the figure of Macron, with both groups anxious about the future that the President has promised.
“The government has inflamed unease with this reform. It is the other France that is revolting today”, said economist Daniel Cohen of the École Normale Supérieure. “Last year it was the cutoff France, and this year it’s the unions, the teachers.” That two different sectors of France’s workers are coming together on the streets may spell trouble for Macron’s government. Cohen added that concessions made to the Yellow Vests last year wasn’t enough to allay underlying social anxiety. “The social tissue of the working classes is very frayed. There’s an economic and anthropological insecurity.”
As a liberal-democrat in an increasingly populist political environment, Macron is seen as profoundly out of step with citizen’s demands for more protection from the government, at a time when the administration is dependent on popular opinion. Last year, when support for the Yellow Vests dipped below 50 percent, the government relied on police to check the movement. Right now, however, support for protestors is around 70 percent.
“Striking [is] the only means to obtain social progress in this country”, said Benjamin Amar, political spokesman for the CGT, one of the 30 unions on the street. “You have to use le bras de fer (strong-arming).”
The current reform, Amar said, would have “catastrophic social consequences” for French workers. “Macron is the president of the patronat (the employers). The reform is a gift in disguise to them”, he said. “No one likes striking. It’s tough on our wallets, our physical and mental health. But we need to mobilise to defend our rights.”
The CGT was the leading trade union during the 1995 strikes, when former President Jacques Chirac’s government tried to push through an unpopular pension reform. After three weeks and with nearly two million people on the streets, the government abandoned the reform – a feat that this union hopes to reproduce.
Jean Grosset, director of the social dialogue observatory at the Jean-Jaurès Foundation, a left-wing think-tank, noted that if neither side is willing to compromise, a wider social crisis could result. “The ball is in the government’s court. It may succeed in forcing the reforms though but if there is no dialogue, no attempt to compromise, just force, it will leave traces of rancour in the country, which it will pay for one day or another and most likely through the ballot box”, Grosset said.
If Macron succeeds in making pension reform work, he will be the first leader in France to do so. In 1995, Chirac tried to introduce a universal system and bring about an end of the “special regimes” still enjoyed by public sector workers today, but failed. In 2010, President Nicolas Sarkozy successfully raised the retirement age from 60 to 62 – but only after a week of strikes, the blockading of oil refineries, and nationwide protests. And Macron’s predecessor, the Socialist François Hollande, also promised to tackle the deficit in the pensions system but dropped it after Parisians turned up in the tens of thousands to protest.