The is french the government has decided to implement a controversial pension reform that looks set to split the country and cause social unrest. On January 10, Prime Minister Elizabeth Bourne presented details of changes to the country’s mandatory pension rules. I will test the fate of these measures Emmanuel Macronopportunity to continue reforming France during his time second presidential term.
The focus is on raising the retirement age from 62 to 64 years by 2030. This measure is very unpopular among French, but in line with Mr Macron’s campaign promise ahead of his re-election in April 2022. Ms Bourne’s package includes raising the minimum state pension by 100 euros ($107) a month to 1,200 euros, paid to those who have made the required lifetime contributions. The prime minister has made other concessions aimed at winning political support, including extra pension credits for those with physically demanding jobs or those who started working at a very young age.
France’s new pension rules are both bold, late and less radical than planned. Boldly, because the decision to embark on this reform at all comes in the midst of a decline in the cost of living that is part of the fallout from Russia’s invasion of Ukraine. Thanks to France’s generous government subsidies and limits on price increases, the country’s inflation rate of 6.7% is one of the lowest in the euro zone and fell in December. But the French are still feeling the pressure in their pockets, and it’s only going to get worse. In 2023, the government is allowing household electricity bills to rise by 15%, up from 0%-4% in 2022. Corporate accounts are rising dramatically. Small business, including local boulangeriethe country’s bakers are cherished baguetteare under special stress.
The reform is also bold politically. Few outside Mr Macron’s party and his supporters want the reform, although the Employers’ Federation has applauded it. 68% of French are against raising the retirement age to 64, 77% from 35 to 49. All of the country’s unions oppose any increase in the retirement age, including, to Mr. Macron’s dismay, the French Democratic Labor Confederation (CFDT), moderate union. Most of the opposition parties are also against the reform. Indeed, Marine Le Pen’s nationalist-populist National Rally and Jean-Luc Mélenchon’s defiant France want instead to lower the retirement age to 60, at least for some workers. The first day of protests and strikes is scheduled for January 19.
The reform is overdue. Mr Macron has promised this since he was first elected in 2017. Endless consultations, mixed messages and the failure to reach consensus on a previous version in 2019 led to the longest period of strikes France has seen since the 1968 uprising. Mr Macron’s first attempt was finally shelved when the 2020 outbreak of COVID-19.
However, France cannot afford to keep things as they are. At 60, the average retirement age for French men (61 for women) is the third lowest in OECD. Thanks to the high life expectancy, a retired man spends an average of 23.5 years in his chair (and a French woman – 27 years), the second longest. Only 57% of 55-64-year-olds are still behind desks, compared with 74% in Germany and 65% in Britain. Indeed, many firms are displacing workers before they retire. The government says it will force them to publish employment statistics for older workers to encourage them to behave better.
This way of life has its price. Now France spends 14%. GDP retired almost twice OECD average. According to Finance Minister Bruno Le Maire, by 2030 the deficit of the French pension system will reach 14 billion euros. The new measures should conveniently close this gap. “Given the current environment of upward pressure on interest rates, this pension reform is an important message for investors,” said Ludovic Subran, chief economist at insurer Allianz.
Overall, however, the reform is less radical than what Macron originally envisioned. When first elected, he wanted to introduce a universal points system to make sense of the labyrinthine system of regimes and rules that now govern the rights of various employees. Currently, most French workers have no idea of their exact pension entitlement, which in turn confounds decisions about whether to stay at work later in life. If France wants to increase the proportion of older workers who keep their jobs, it needs to make things easier at some point.
The government’s new rules must now be submitted to parliament. The best hope for Mr Macron, who lost his parliamentary majority last June, is to win the support of opposition Republicans. The president’s centrist alliance currently has 250 seats in the National Assembly, 39 seats short of a majority. But the Republicans, who raised the retirement age themselves when in power, do not want to give Macron an easy victory. If a parliamentary majority cannot be found, the government may have to resort to using a special provision of the constitution to force the rules through, risking calling for new elections.
Technically, in other words, Mr Macron can introduce this reform into the statutes by September, as the government wants. However, the fiercest opposition may not come from the parliamentary benches, but from the street. Trade unions and opposition parties promise demonstrations. New forms of protest and protests may appear. Strikes during the Christmas period at St sNCFof the national railway, were organized through Facebook without union support.
In short, France appears to be in for a period of unrest. Mr Macron remains unpopular, with an approval rating of just 36%. Any off-hand remark about new offers that slips off his tongue can spoil the mood even more. If the president is to make a mark on his second term, he may have no choice but to stand firm, shut up and sit out. ■
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