AAFTER MONTHS Talks, endless delays and a week of disruptive strikes, the French government finally unveiled its long promised pension reform on December 11. The good news is that he has decided to continue his plans, including the removal of special privilege regimes, despite the largest demonstration of union strength on the streets since President Emmanuel Macron took office in May 2017. The bad news is that the new system will place the entire burden of change on the young French generations.
In a speech which leaned studiously towards the left, Edouard Philippe, the Prime Minister of the center right, described the new universal system of points as a “more just” system which will guarantee “social justice”. It will replace the current spread of 42 plans, most of which have different rules. For those starting their working life, the new rules will apply from 2022 and from 2025 for those who are already in activity but currently under the age of 45. Older generations will keep the existing rules. Sliding transition rules will make the new system fully operational by 2037.
Under the new system, the special schemes, which now allow train drivers to retire at the age of 50, will be abolished. The pensions of workers in the public sector will be calculated according to the same (less favorable) rules as those of the private sector. The new point system will allow those with uneven careers, including many women, to accumulate credits for each hour worked. A minimum monthly pension of € 1,000 ($ 1,100) will be introduced from 2022, to help farmers and others who currently survive on less. High wages will pay additional contributions for other people’s pensions. And, although the legal minimum retirement age remains at 62, a new 64-year “break-even age” will encourage people to work beyond that. Medef, the employers’ federation, described the package as “good balance”.
Will this moderate approach help calm the streets? Philippe clearly indicated that he would not entirely put the project aside, as the unions want. Since December 5 SNCF, the national railways, as well as regional trains, the Paris metro and airport ground staff, are on a continuous strike which is expected to continue. Teachers organize walkouts every few days. The unions know very well that the former French governments have backed down in the face of crippling strikes. Alain Juppé, Prime Minister in 1995, insisted that he would stand firm against a demand for action, to yield and put aside his own pension reform a few weeks later.
Mr. Macron wants to prove that he is different. He has long argued that France must be “transformed” rather than simply “reformed”. This is why he promised during his 2017 electoral campaign not to raise the retirement age but to rethink the whole system. The issue is therefore not only France’s ability to create a fairer and more flexible pension plan, but also Mr. Macron’s reputation as a reformer who does what he promises.
This week, the radical unions went deep and promised to stay on strike. Even the French Democratic Labor Confederation, a more moderate union that supports a point system, is now furious because of the “age of balance”. To carry out his reform, the unpopular Mr. Macron will have to rely on public opinion. For the time being, the majority of French people continue to support the strikers, as they did in 1995. The more the disturbance continues, however, the more this support could ebb. The first day, 800,000 people, according to official figures, took to the streets of the country. On December 10, only 339,000 were revealed. The share of teachers on strike fell to 16% from 47%. Midweek only 16% of all SNCF workers had cut down tools, compared to 56% the first day. Most of the metro lines in Paris and the fastest trains across the country, however, continue to be closed. The strike could still last a while.
One year after yellow vests (yellow vests) protested, France remained agitated and suspicious. To this is now added a new division, between the generations. “The baby boomer generation is taking advantage of the current system and wants to avoid any pension reform at all costs,” explains Maxime Sbaihi of Génération Libre, a liberal think tank. Those who have already made the most of France’s generous welfare state should keep their rights to one of the most generous pension plans in the world. ■
This article appeared in the Europe section of the print edition under the title “OK boomer”