PARIS — Just when Emmanuel Macron seemed to have finally put the Yellow Jacket protests behind him, the French president is stirring up the country once again — with what he’s calling a “Big Bang” overhaul of the country’s sacred pension system.
Last week, metro and bus workers halted almost all public transport in Paris for the first time in 12 years. This week, lawyers, doctors, nurses, airline pilots and flight attendants poured onto the streets of the capital. On Saturday and on Tuesday, two of the largest trade union federations will march behind banners accusing Macron of dismantling the French way of life.
The Big Bang pension reform, promised by Macron during the 2017 election, is a huge gamble — an attempt to reduce France’s jumble of 42 different state pension systems to one. The last president to try anything so daring was Jacques Chirac in 1995. He was forced to retreat in confusion and lost a parliamentary election 18 months later.
Designed to address one of the most crippling structural problems in the French economy, the reform is likely to be good economics in the long run. The short term looks far less appealing. It won’t take full effect for six years, meaning that while it’s likely to annoy almost anyone, it won’t provide any benefits before the 2022 presidential election (or even the one after that).
In other words, it is just the kind of essential but unrewarding reform that prudent politicians avoid. French politicians in particular have been avoiding measures like this one for decades.
Macron argues that pension reform is the only way to persuade the French to work longer.
Macron’s gamble is based on a different political calculation. The pension reform will be — after the labor market and other reforms pushed through in his first year — the final large piece in his plan to rescue France from itself. The French president will never be able to seize the de facto leadership of the European Union and demand the changes he wants unless he is also seen to attack the core problems at home.
But why pension reform? Why now?
Though by far the most radical, Macron’s would be the country’s sixth pension reform in 26 years. After five partial or sticking-plaster reforms carried out since 1993, France’s state pension system is still losing money but not disastrously so. The present system, actually a jumble of 42 systems, is more or less sustainable.
The problem is that it is also opaque, perverse and often unfair. In theory, everyone retires at 62. In reality, the average real retirement age is 63, but that number masks a host of disparities. The average age for men is just over 60. Some people, mostly women with fragmented careers, have to work until they are 67.
People ride bicycles in Paris on September 13, 2019, during a one-day strike of Paris public transports operator RATP employees over French government’s plan to overhaul the country’s retirement system | Martin Bureau/AFP via Getty Images
Old sweetheart arrangements for some state employees — de facto subsidized by other workers — mean that railway drivers can retire at 50 and most metro workers at 55.
Macron argues that pension reform is the only way to persuade the French to work longer. The country, taken as a whole, works less than any other industrialized country (630 hours a year for every man, woman and child, according to the Organisation for Economic Co-operation and Development, compared with 722 hours in Germany, 747 hours in the U.K. and 826 hours in the U.S).
The reasons for this include high unemployment, long studies, long holidays and the 35-hour working week (though its effect is sometimes exaggerated). But the single most important factor is early retirement, especially among men.
Indeed, being retired in France can be an attractive proposition. State pensions in France vary but can be generous. They are based on the last six months’ earnings for state employees and an average of 20 years’ best earnings for executives in the private sector. French retirees receive average state pensions of 61 percent of their final earnings, according to the OECD. This is less than Italy (83 percent) but far more than Germany (38 percent) and the U.K. (29 percent).
To spare left-wing sensibilities, Macron promised in 2017 that he would not touch France’s “official” retirement age, already increased by his predecessor Nicolas Sarkozy from 60 to 62 in 2010. Instead a draft plan presented in July seeks to increase the “real” retirement age, by stealth or by incentive, as part of a much bigger reform.
The details are up for discussion with unions and employers. A draft law is expected next spring. Its basic idea will be to boost pensions for those who agree to work longer, and reduce them for those who choose to retire early.
Macron has defied one of the iron rules of politics: Do nothing that will benefit the country in the long run if it angers voters today.
Pulling this off will be a challenge. There are 42 existing regimes (10 for the state railway, the SNCF, alone). Macron wants to replace them with one state system, based on personal “points” acquired during a working lifetime. He says this would be fairer and make life easier for people who change jobs. Only the best-paid civil servants and executives would lose out. Any problems will be ironed out in negotiations before the draft law is presented.
This is disingenuous. There will inevitably be many losers (as well as many gainers) from the Macron scheme. Nurses, for example, have already pointed out that their pension regime has a €3 billion surplus; the lawyers’ fund is €2 billion in the black. Other funds, such as those for Metro workers, are chronically loss-making. Teachers, poorly paid early in their careers, say that they would lose out if their pensions are decided by lifetime “points” rather than “final salary.”
The attacks have already begun. Far-right leader Marine Le Pen and politicians of the hard left are already misrepresenting the reform as an attack on all pensions. There’s also the risk that the various demonstrations and strikes could merge with other social grumbles, including the rump of the Yellow Jacket movement, to destabilize Act II of the Macron presidency.
And yet, Macron has reason to be hopeful. His opinion poll ratings are climbing to the high 30s and low 40s (historically high for a French mid-term president). The biggest and most moderate trade union federation, the CFDT, broadly supports the reforms. Other trade unions have failed to agree on a common front against them.
Macron has defied one of the iron rules of politics: Do nothing that will benefit the country in the long run if it angers voters today. He may yet get away with it.
John Lichfield is a former foreign editor of the Independent and was the newspaper’s Paris correspondent for 20 years.
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