By: Aleena T Sabu, Research Analyst, GSDN
The French Pensions reform bill signed by French President Emmanuel Macron will come into effect from early September. The bill had received widespread backlash from workers around the country, leading to many protests and unaccounted violent attacks in many parts of the country. The bill was in talks from 2019 with warnings and public backlash, but President Macron continued with his plan to increase the legal retirement age from 62 to 64 along with the number of years needed to be in service in order to be eligible for pensions. He argued life expectancy rates have increased and it is straining the country’s economy. This reform was to come into act from 2019 but got delayed because of the Covid-19 situation prevalent across the world.
Background
The plans for increasing the retirement age have been in talks in France for years and there have been various motions to set it in place but it always sparked tensions and protests from the people. France is one of few countries in the world which has the lowest retirement age and the highest pensions for decades. This system has persisted for so long that the economy is faltering. Many other European countries like the UK have increased their ages for retirement as it is the only way to match the increasing number of living older population.
President Macron claims the economy will run into a ditch if the pension reform plans are not put into focus. If the plan is not put into motion, then the economy will have a rundown by 2023 and 2027, although it is said to get back on track by the mid-2030s based on reports by France’s Pension Advisory Council. Although attempts to have any increase have been met only with criticism from the opposition as well as the public. In his first term, President Macron met with criticism for his take on the pension reform plans. Previously, in 1995, the then President Jacques Chirac, planned to increase the age of retirement for some categories of civil servants, but it did not come into effect because it was met with protests with millions of people on the street for the longest period. 2010 was also a year of the marked protests in France over the increase of legal retirement age from 60 to 62. Although it was met with criticism, the government increased the age after the protests subsided after a week. Protestors in France have had success in persuading the government not to make any changes to the pensions bill over the course of years in the country.
Why people are Protesting?
The people in France have been protesting head on for weeks against the increase in the legal retirement age of workers from 62 to 64. They argue that there is no such case of economic crisis and that the government must not burden people even more. Opponents, which include the left as well as the right and the workers’ union, cite that there is no need for such reforms as they will take away a good two years of retirement from the blue-collar workers instead of increasing the taxes of wealthy people.
The bill is said to only benefit the rich and will drive the blue-collar workers into more hustling and even lesser chance of living a happy life after retirement. The bill not only increased the age but also increased the number of years required to fulfil the minimum criteria to be eligible for the pension. This has triggered protests in mass numbers in the cites of Paris, Lyon and Nantes. Labour unions estimate an amount of 2 million people to have come for the protests, while France’s interior ministry has estimated a sum of 570,000. People have been looting stores and restaurants, bank windows are smashed and the BlackRock office in Paris has been invaded. The police have responded with teargas.
The hard-left leader of France, Jean-Luc Melencho says that the protests will continue no matter the outcome of the courts. People are gathering in thousands in Paris and there have been violent attacks and vandalising by the left wing.
The reform bill has not been popular with the members of Parliament either and they do not want to risk public opinion. The public have always been reluctant to the bill and always protested it whenever it was bought up be it 1995, 2010 or 2019. This made it even more reasonable for the Parliament to not support the bill.
Macron, on the other hand, believes that the protests will subside after the coming of the decision from the constitutional council, which will decide if the bill needs to be kept in case of a constitutional appeal by another party. He hopes the result will discourage the protests and that the people will understand the need for reforms in the now globalizing world.
How Macron Pushed through the Reform despite so much opposition?
President Macron faced so much opposition to the reform bill even from the Parliament. So, he decided to move differently around this bill by cancelling the vote. Instead of doing normal parliamentary voting, the President pushed for a controversial special constitutional power. Article 49.3 of the French constitution gives the government the power to bypass the Parliament.
Macron changed the voting method only minutes before the lower house members were about to cast their vote. Macron was in meetings and discussions with political leaders and finally decided to use the extra constitutional power to bypass parliament’s decisions. He explains that the country’s economy is at risk and it cannot be taken lightly. The left and the hard left-wing MPs voiced their opposition in the Parliament by singing the national anthem loudly and asking the President to resign. A vote of no-confidence was called 24 hours after of Article 49.3 and the President narrowly escaped the no-confidence motion by the vote of 278, it fell short 9 votes as 287 votes. If a no-confidence motion had been a success, then the President had to name a new government or hold new elections. A second no-confidence motion set out by Marine Le Pen’s far-right National Rally party was also not met with any success.
Pensions in other European Nations
A closer look at the numbers in the European nations will give a better idea of how France stands in comparison to its other neighbours. France has one of the lowest retirement ages among the European nations. The average age is 64.3 across the 27 nations in Europe. The OECD explains that French people spend longer in retirement as their retirement age is lower and the life expectancy of people is longer than in other European nations. A French man spends 23.5 years in retirement, second to Luxembourg’s 24 years and Britain and Germany’s 20 years.
The French spend 14 percent of their economic output on retirement pensions and that is double the OECD average of 7.7 percent. The only two countries spending more than France are Greece and Italy, but this keeps France’s poverty rate at 4 percent compared to other European countries and their gap between the rich and poor is very grim when compared to other nations. The argument which can be made here is not whether France provides a better policy for pensioners, but it depends upon the metric that is used to measure or access the situation.
Moving Forward
France’s President must make decisions ever so carefully now about pensions reform. The judgements and decisions he make will end up having drastic consequences for his people. People are on the streets demanding to take back the reform as they believe it will bring more harm than good, as the President claims. The French pension reforms have always sparked conflicts between the people and the government dating back to history. This clash is always going to be pertinent between the government and the people. Making decisions that will not endanger the common likings of the people as well as the economy is very important for the proper functioning of a country. The French President believes that working a bit longer like their European neighbours could save the country from an economic meltdown, but this is yet to be seen as a study published by a think tank called Rexecode on how the French pensions reform will affect the economy explains that even with the reform, the country will face an economic crisis in the future.
