The French pension reform : the ultimate sacrifice of the workers or an inevitable state necessity?

With more than 25 million demonstrators gathered during more than twelve days of national mobilizations according to the CGT, one of the five major French confederations of trade unions, pension reform has now been at the heart of the French political scene for some months. The pension reform, which had been abandoned during Emmanuel Macron’s first five-year term, returned to the center stage in this second term and sparked a strong protest movement in France.

Indeed, the pension system and the need to reform it have become major issues within European democracies. Since the Fornero reform of 2011 – which moved the retirement age in Italy from 60 to 67 – many governments have tried to modify the pension system without succeeding or even, occasionally, succumbing to this will.

But why did the French government proposed to reform a highly sensitive subject such as pensions?

Because of the burden they have on public finances. Pensions have a considerable weight on the state of public finances – in 2020 the budget devoted to retirement pensions represented 40.8% of social benefits and 14.4% of GDP – and they limit and shape the policies put in place by the government. The executive’s will to propose a new investment plan to stimulate growth, while maintaining the defined path for the consolidation of public finances, seems to be possible only through a reform of the pension system. Certainly, the argument supported by the executive is that the reduction in the number of employees, followed by the increase in the number of retirees and the lengthening of life expectancy, condemns the pension schemes to go belly up in 2030. In addition, the strict requirements set by the European Union with regard to budget deficits force Member States to define policies for the recovery of public finances. According to the executive, there is an “urgency” to straighten out a regime that could face a deficit of more than twenty billion euros in 2030. As Prime Minister Elisabeth Borne said, letting the deficit grow “would be irresponsible”. Thanks to this new reform, the social security accounts, estimated to be in deficit by 8.2 billion euros in 2023, should return to a state of “balance” in 2030. This is essentially the argument used by the government to justify such a reform.

But what does the proposed reform actually change?

The project, which was initially supposed to extend the minimum retirement age from 62 to 65 in 2031, as announced by the Head of State during the presidential campaign, has finally moved the age of retirement by two years. To obtain a “full credit” pension, i.e. without a discount, the legal retirement age will no longer be 62 but will be gradually increased until it reaches 64 in 2030. In addition, the number of contributions – that is the sum of the premiums deducted from the gross salary in order to finance pensions – required to be able to retire will increase from 42 to 43 years. It will therefore be necessary to work for more years and contribute more to be able to retire.

What are the arguments used by the opponents of this reform?

The will of the executive to bring on such a sensitive subject has sparked the revolt of the eight main unions which, for the first time in twelve years, have unanimously decided to mobilize together against an “unjust and brutal” reform. As soon as the project was unveiled on January 19 they launched a series of strikes that turned the country upside down. If on the one hand the increase in life expectancy is a logical cause of the need for this reform, many criticisms have been leveled against a reform which, according to the unions, penalizes people with physical and strenuous jobs and mostly women. The argument is that people with arduous jobs will find it more difficult to work longer due to the grueling nature of their jobs and that these people also tend to have lower incomes, which is correlated with a lower life expectancy. Opponents of the reform also claim that women will be disproportionately affected as many of them interrupt their careers to have children. These interruptions are often followed by part-time work, which means that it will take longer for women to reach the required number of pension contributions. There have also been proposals to raise taxes for large corporations but, as I mentioned earlier, this would cause a fall in the economic growth that the executive is so hardly pursuing. What also contributed to raising protests was the legislative itinerary that this reform followed. The reform was in fact presented to the Parliament in February and March via a special Social Security financing bill (Loi de financement rectificative de la Sécurité sociale), a flexible legislative vehicle that allowed the executive to limit debates. Moreover, while the Senate, after intense negotiations, had confirmed its favorable vote, the government, not being sure of having the majority in the National Assembly, Emmanuel Macron resolved to use article 49.3 of the Constitution which allowed him an adoption of the reform without needing the latter’s approval. The use of the 49.3, an extremely unpopular constitutional weapon often perceived as a “denial of democracy” – as François Hollande defined it in 2006 to denounce its use by Prime Minister Dominique de Villepin – contributed to hardening the social movement against reform and pushed the Prime Minister, the left and the far right to seize the Constitutional Council. On Friday April 14, the Constitutional Council finally validated the essential points of the pension reform even if strong criticism remains as to the constitutionality of the legislative itinerary and especially on the way in which the reform was debated in parliament. As

Dominique Rousseau wrote in his tribune published in Le Monde, the decision of the Constitutional Council “is binding but, because it is ill-founded and poorly reasoned in law, it cannot close the dispute.”. The constitutionalist expresses his surprise given that, even if the council acknowledged that ministers issued “erroneous estimates” during parliamentary debates, several procedures were used “cumulatively” to accelerate the adoption of the law and that the combined use of the procedures implemented is “unusual”, he nevertheless proceeded to reject only seven minor measures, thus going against the principle of “clarity and sincerity of parliamentary debates”.

Is this new retirement age close to that of other European countries?

To better understand and contextualize the French situation, it would be interesting to compare it with other European countries. Indeed, if this reform seems dramatic for the French people, in many other European countries the situation is much worse than in France for workers. In Italy, for example, as in Germany, the retirement age to have a full pension is set at 67 years. In the Netherlands and Portugal, the retirement age is 66. 65 years old in Spain with at least 37 years of contribution. Same in Sweden, Belgium, Austria and Croatia.

Wouldn’t this reform be necessary if so many other European democracies have implemented it and as we have already seen, life expectancy is increasing? As Descartes suggested, the truth is not democratic, the thesis that will have the highest number of supporters won’t necessarily be true. The fact that many European countries have moved their legal retirement age doesn’t imply that this is the right path to follow. Nevertheless, without a timely reform of the pensions, the public finances would have found themselves bankrupt by 2030 and this reform will, in part, improve the situation.

Massenzio Marè

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