France – the stalemate of pension reform

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By ROBERT BOYER*

It is completely counterproductive to claim that a reform is the only possible

After the reports of the Retirement Guidance Council [Retirement Orientation Council] (COR) and the many discussions they provoked, isn't it abusive to talk about improvisation? This is, however, the mandatory hypothesis in order to analyze the strategy of governments, since the first term of Emmanuel Macron.[1]

Immediately, the 2019 renovation…

The point retirement reform had already been presented as essential, as a producer of social justice and as the only solution to avoid the crisis of the pay-as-you-go system. During the discussions that this structural reform implied, it became evident that the number of social categories that were penalized required compensatory measures of such complexity and volume that the effectiveness of the proposal became problematic. By coincidence, the outbreak of Covid ratified the abandonment of the project.

What was submitted for discussion in Parliament is the opposite of the first project, since it consists of a simple parametric adjustment based on a single variable: the legal age for starting retirement. This bill essentially places the burden of reform on the fraction of the population that is already most disadvantaged in terms of life expectancy in relation to the effective retirement age. The presentation of this project to public opinion manifests the same errors and estimates.

At first, it was announced that the objective is to promote social justice before government spokesmen recognized that women and long-term wage earners would in fact be penalized. This raises amendments in order to correct these shortcomings, following the same point-by-point deconstruction process of the point-by-point retirement project.

In a second moment, the reform was presented as the only solution to avoid the increase in deficits, while the latest COR scenarios show that the urgency is completely relative and that there are many other solutions, as long as the government accepts to assume all the parameters which are the level and number of years of contribution and the relative standard of living of retirees compared to active workers.

The choice of inequality

There is a rationale for this restriction concerning the parameters of the reform. One of the guiding principles of Emmanuel Macron's presidency is to reduce taxes and social security charges on companies in order to make France more attractive and thus boost growth and employment. Furthermore, retirees are indeed numerous among the center and right-wing electorate.

But is the current viable reform smart? Not at all! In fact, the implementation of an accounting logic comes into open conflict with changes in work and citizens' expectations. It is not enough to announce an expansion of salary ranges for companies to decide to train their employees better, so that they continue to be effective when they get older. Indeed, the most unhealthy professions are the most likely to result in a situation of disability and in which the obsolescence of skills has not been compensated for by training throughout life, with the result that seniors are unemployed.

The reform is faced with a second source of inequality: access to education and then professional training. In addition, the strength of the demonstrations reminds the government that burnout at work is a decisive phenomenon that has been accentuated with deregulation, which makes the retirement period even more precious. The pay-as-you-go system and the legal age for starting retirement are part of a founding social pact. This perception prevails over the cold logic of the evolution of the index between retirees and active workers.

The three ways to resolve the impasse

How to resolve the deadlock? Recognizing a triple imperative. First, it is illusory to declare an emergency for demographic and economic phenomena that occur over a long period of time: the principle of anticipation must prevail. Secondly, it is totally counterproductive to claim that reform is the only possible one: the slogan “there is no alternative” has proved to be the cause of major crises and must be replaced by the principle of deliberation between all the interested parties involved (representatives of the employees, companies, the education and training system, specialists in the organization of occupational health, researchers working with the aging process and chronic diseases, etc.).

Was this not the great merit of French-style planning, which has now been forgotten? In fact, it would make it possible to build a social pact, even if implicit, in order to order the priorities of all public policies, coordinated by a common objective: to bring to light another way of development. In addition, this instance could also be responsible for ecological planning, a horizon in which the issue of pensions should be included.

*Robert Boyer he is director of research at the CNRS at the École normale supérieure. Author, among other books, of Theory of regulation: fundamentals (Freedom Station).

Translation: Angela Lazagna.

Originally published in Economic Alternatives.

Translator's note


[1] In 2019, a Social Security Reform Project was presented in Parliament that mobilized a national strike in France. The demonstrations take place between December 2019 and February 2020. The Covid 19 pandemic interrupts the analysis of the project in parliament, as well as the movement that opposes it. The project is therefore removed from the agenda of the voting agenda.

The project is presented again in 2023, triggering massive demonstrations in the country in February and the beginning of a general strike on March 7. The strike affects, above all, the transport sector, the energy sector, the garbage collection and incineration sector and the elementary and secondary education sector.

The main point fought by the trade union movements is the increase in the age for starting retirement from 62 to 64 years. Another highly criticized aspect (which was already voted on and approved by the Senate on Saturday, 04/03) is the end of the special retirement regime, as of September 1, 2023, for future employees in the energy and transport sectors.

The government is based on a single argument: the demographic increase of retirees in relation to active workers, without considering other variables in the world of work today (insecurity, deregulation of contracts for an indefinite period, etc.).

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