The first day of protests against the government’s pension reform could bode badly for President Emmanuel Macron. At least 80,000 people gathered in Paris on January 19 (see article picture), nationwide there were up to two million. So many demonstrators as not in more than ten years. The protests continue this Tuesday (January 31).
Again and again chants like “On est là, on est là, même si Macron ne veut pas, on est là” (“We are there, even if Macron doesn’t want it”). Because although the government insists that the pension reform is absolutely necessary, many French people are against the plans. And even some economists.
Frank Lopes Costa was one of the demonstrators that Thursday in Paris. “It’s not just about pensions – the reform calls into question the heart of our social system,” the 35-year-old elementary school teacher told DW. “The times are difficult anyway, also because of the rising prices. Now they want to force this reform on us as well. France is becoming more and more liberal economically, but we don’t want that.” According to surveys, the proportion of French people who, like Lopes Costa, are against the reform is increasing – most recently it was almost 70 percent.
The government insists that the reform is urgently needed. “We want to keep our pay-as-you-go system. This reform will guarantee the future of our pensions,” Prime Minister Elisabeth Borne told the Senate in mid-January. Unlike other countries such as Germany, France has a pure pay-as-you-go system, without any elements of private provision. There are general pension funds for employees and civil servants and 27 special funds, for example for ballet dancers at the Paris Opera and police officers who retire earlier.
The government wants to raise the minimum retirement age from the current 62 to 64 by 2030. In addition, from 2027 people would have to have worked for at least 43 years – and no longer just 42 – to receive a full pension. In any case, you are still entitled to the full pension rate from the age of 67. The reform would guarantee an earlier pension for those who started working particularly early and would retain certain special funds while abolishing others at the same time. Macron also plans to raise the minimum pension by around €100 to around €1,200 a month.
The government is basing its arguments on a report by an expert commission commissioned by the government. Accordingly, pension expenditure in 2032 would correspond to up to 14.7 percent of gross domestic product and no longer the current 13.8 percent. For many economists it is therefore correct to tighten the minimum retirement age – also in view of the demographic development.
“In 1950 four workers financed one pensioner, in 2000 it was only two and in 2040 it will be 1.3. That will no longer be sustainable,” says Jean-Marc Daniel, Professor Emeritus of Economics at the Paris ESCP Business School. “Furthermore, the only reason why the pension system is not in the red is that the government pays for the pensions of civil servants, among other things. If it didn’t, there would be a deficit of 30 billion euros.”
Economist Philippe Crevel, head of the Paris think tank Cercle de l’Epargne, agrees. “This reform is necessary because we need more workers to promote economic growth,” he told DW. “In France, the employment rate among seniors is relatively low compared to other countries. Raising the minimum retirement age would automatically raise it.”
But not all economists are behind the reform. And, paradoxically, their opponents rely on the same expert commission report that the government is citing as evidence. It states that “depending on political preferences, it is perfectly legitimate to implement pension reform or not”. After all, the results of the calculations did not show that spending would spiral out of control.
For Michael Zemmour, an economist at the University of Paris Sorbonne and not related to the controversial far-right politician Eric Zemmour, this is proof that the government is doing the reform for other reasons. “Our pension system is doing well, also because the retirement age has already been raised through previous measures,” he told DW. “The government just wants to balance its budget because it’s mainly given tax breaks to corporations – they want to dismantle our welfare system bit by bit.”
At the same time, the high government spending is justified, because the French pay-as-you-go system reduces inequalities. In addition, many worked longer than the age of 62 anyway in order to get the full pension rate. France’s actual retirement age is in the middle of Europe, according to the economic expert. “Although the experts’ report predicts a deficit in a few years, this could also be compensated for by higher employee and employer contributions, which many French would prefer to this reform,” says Zemmour.
In the face of such dissent, the French hardly know what to think, says sociologist Danièle Linhart, who specializes in the world of work. “The experts in the media shower us with examples and analyzes that we hardly understand anything about,” says research director emeritus at the public institute CNRS to DW. “People see that the conclusion of an analysis depends on the ideology of the expert. This is about which society we want to live in – a market-oriented one, in which the law prevails, or one that cushions inequalities.”
At the same time, people in this country react particularly sensitively to the topic of pension reform. “The French have a very special relationship with work that dates back to the time of the French Revolution,” she explains. “This has established that you can only sell your labor as a free citizen. Work thus became a symbol of the class struggle. People fought for the right to retire at a certain age for a long time.” And the French don’t want to give up this right just like that – further demonstrations and strikes are already being planned.
Author: Louis Lisa (Paris)
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The original of this post “France’s pension reform: Mission impossible?” comes from Deutsche Welle.