Non merci! Why the French refuse Macron’s pension reforms
emma_crmlProtesters across France take to the streets in response to Macron’s pension reform proposal. Photo source: Roland Godefroy
More than 1 million people took to the streets on Thursday, 16th of January in France in what would prove to be a historic day for the country. Reports from labour unions have come out stating that roughly 400 000 people were present at the Place de la République in Paris for the occasion. French news outlet OBS reported that roughly 26 000 protesters were counted in Marseille. Police task forces were spread out and ready to contain any sort of violence that, in France, typically comes with these mass protests. Overall, roughly 30 individuals were arrested in Paris as a result of the protest. The numbers above are staggering and have surprised people from around the world, leading to question the real cause of this upheaval.
It seems as though Emmanuel Macron, the current President of the French Republic, and his government have taken steps towards tarnishing his already unpopular reputation. Recently, his administration proposed a very controversial reform to the pension scheme in France. This reform would see the official retirement age increase by 2 whole years, from 62 to 64. Additionally, it would imply that individuals would have to work 43 years in order to qualify for a full pension instead of 42, starting in 2027.
Pension plans: a controversial topic
At first glance, one could think that this reform has validity when looking at the current official retirement age in France, which is significantly lower compared to other European countries such as Italy, Spain, and even the UK. Additionally, with life expectancy numbers increasing on a global scale and the workers-to-retirees ratio alarmingly plummeting in the past years it would seem that raising the retirement age would make sense. However, the French seem to think otherwise.
In fact, France uses a share-out pension system, which means that the current workforce pays for the current pension plan system. This is unlike the pensions scheme of some countries, where a majoritarily private system is in place which entails that workers pay for their own retirement fund. France has historically refused to adopt the latter as it has generally attempted to reach equal and fair social redistribution on a national scale, especially when it comes to pensions. With a share-out pensions system, all retirees receive relatively consistent funding which comes directly from the younger generation of workers, which makes for a system based on solidarity and egalitarianism. In contrast, a private pension scheme allows members of the higher classes to retire earlier, receiving larger retirement funds, but without contributing to the general workforce and the classes below them; making this a system based on individualism and inequality.
However, what makes the French pension scheme unsustainable in the long run is very simple. With declining birth rates on a national scale, and the generation of baby boomers (people born from the mid-20th century baby boom) slowly entering their retirement years, the demographic scenario in France simply does not favour a share-out pension system. Eventually, the workers-to-retirees ratio will decrease too much to support national retirement funds. On the bright side, because this is a demographic issue, this makes the problem relatively easy to predict, analyse, and handle; which is essentially what President Macron is attempting to do, a change that many claim to be ahead of schedule.
A historical fight
The fight over the reform of the pension system in France has been the root of much debate for decades now, specifically upsetting the French population throughout the last couple of presidential terms as numerous administrations attempted to build a pension plan that drew more similarities with those of neighbouring countries. Nicolas Sarkozy, who served as the President of France from 2007 to 2012, managed to raise the official retirement age from 60 to 62 back in 2010; a move that had provoked similar reactions to those that were witnessed this past Thursday. With constant and heavy backlash led by the unions across France, the pension system seems to be an extremely touchy subject.
emma_crmlAn initial proposal for the reform of the pension scheme was put forward by Macron in 2019, which was eventually interrupted and significantly postponed due to the recent global pandemic. What has seemed to infuriate a large part of French workers is the real reason as to why the retirement age needs to be changed. The pension scheme in France, which costs the government over 300 billion euros on a yearly basis, is a fully functioning system that is not in deficit in the present day; a status it will statistically not be able to retain if no changes are made in the long term. Protesters affirmed that there are other ways of tackling the deficits that the general social security system in France is facing, with the pension scheme being one of the lesser problems to attend to at the moment.
Interestingly, what made Thursday particularly historic is also the fact that all of the major unions across France, from those on the far left to those on the far right, agreed on the principle of rejecting this reform and unitedly protesting it on the streets. This is important due to the power that the major trade union federations hold in France. Firstly, there are eight of them, which is the most that can be found in any Western industrial country. Secondly, the major ones are considered ‘umbrella’ unions, meaning they are not single industry unions but have semi-independent branches in every industry. Although these unions do not have an incredible amount of members, they have many supporters and voters who help them become part of the governing structure of France. Receiving the support and the votes of the people proves to be crucial when it comes to workplace elections as it decides which unions get to negotiate with and sit in the bodies that effectively run the welfare state. To make matters worse for Macron, he has also faced opposition from the National Assembly and even from some of the conservative Republican party members of parliament, whom he will eventually have to try and rely on in order to have this reform see the light of day.
Inequality and disapproval
Furthermore, there is an overwhelming fear that the proposed pension scheme will increasingly penalise the lower classes of French society compared to the middle and upper classes. In fact, lower-class workers tend to start working at an earlier age, in fields that are typically more physically and mentally demanding, which currently allows them to earn a full pension by the age of 62, if not earlier. Some companies, such as the state-owned railway company SNCF, allow their workers to retire even before the retirement age. With the proposed reform, these exceptions would be almost entirely annulled, forcing lower-class employees to work for additional years, without reaping any sort of significant benefit in the process. This does not fare well for Macron as he has already built up a generally negative reputation with the people living outside of the major French cities, home of a large majority of these lower-class workers. More generally, his approval rating is not something to be proud of, with recent polls showing that only 34% of people surveyed were satisfied with Macron and his government.
Essentially, what makes this a particularly sensitive subject which causes mass protests comes down to policymaking and historic societal structure. The French governing model has, throughout modern history, attempted to promote equality and fair redistribution. This is what the French typically believe to be the right road to take and what they are accustomed to. What Macron has been repeatedly criticised for is his decision-making when it comes to these fiscal and social policies. He has traditionally pushed a more neoliberal and capitalist model of society onto the French population through, for example, his controversial tax reforms from just a few months ago, making his approval rating drop on numerous occasions.
Consequences
The people of France can expect to see strikes across a multitude of sectors including hospitals, transport, and education, which poses a real problem for the coming weeks. On the 16th of January, it was reported that roughly a third of all teachers in Paris decided to join the protests, and the metro in the French capital was running a severely limited service throughout the day. The situation has not shown any signs of improvement for now, with the unions declaring a second national strike day (which will take place on the 31st of January) after the overwhelming and perhaps unexpected success and turnout they saw just a few days ago.
It is important to acknowledge that this is a general problem that many other governments are having to face at the moment — not just Macron. The fiscal and demographic perils that France is facing are generational, making issues that many other countries have to deal with on a daily basis. It was just a few months ago that the United Kingdom almost suffered from a total pension scheme collapse, fueled by a sharp decline in funded ratio. It is interesting to see however the differences in public opinion between the UK and France when these populations undergo similar situations and changes. On one side, the French take to the streets and form protests. On certain occasions, like we have seen with the Yellow Vest Protests since 2018, these have the ability to build an extraordinary platform for many years, provoking international unity through shock and heavily influencing policymaking and European affairs on a matter of subjects. On the other side however, the British population, along with its trade unions, does not react in a similar way — rarely do we see millions of people protesting in the streets of major cities like London and Manchester for potential policy reforms. Indeed, this is a typical characteristic of French society that is not replicated in many parts of the world (if any).
emma_crmlAmidst the backlash and confusion that has risen from the situation in France specifically, one could make the argument that this reform is both necessary but impossible at the moment. Due to the predicted failure of the French pension plan in the long run, it is clear that a reform is necessary in order to avoid having a social security system that runs on a significant deficit. However, it has proven to be almost impossible to change the minds of millions of workers in France who focus on the data that points to the fact that, currently, no reform is economically obligatory. Whatever the case may be, the message Macron has received these past days has been loud and clear: ‘if it ain’t broke, don’t fix it’.
