The story so far: Protesters on Friday, March 17, clashed with the police at the Place de la Concorde in Paris, near the National Assembly (Lower House) building amid growing unrest over the ruling government’s decision to change the state pension age from 62 to 64, meaning people would have to work longer to get a full state pension.
Nationwide demonstrations, which have seen crowds of over a million people and large-scale workers’ strikes since the start of the year, have largely remained fairly peaceful. But on Thursday, March 16, riot police and protesters clashed in the capital after President Emmanuel Macron’s administration used a special provision in the Constitution to push through the contentious pension reform without holding a vote in the National Assembly (where it does not enjoy a majority) as the House plunged into uproar with Opposition politicians singing the French national anthem and holding protest signs in Parliament.
What does the new pension reform seek to do?
In France, all retirees get a state pension. This is how the system works— mandatory payroll taxes apaid by those currently working fund the pensions of retirees, meaning generations have been able to retire with an assured, state-backed pension. French politicians laud the system for creating “solidarity between the generations”.
Now, the government argues that as life expectancy in France increases and so does its ageing population (meaning more retirees than new entrants into the workforce), the current pension system will fall short in the coming decades. According to the administration’s projections, while there were 2.1 workers putting money into the system for every one retiree in 2000, this figure dropped to 1.7 workers per retiree in 2020, and is expected to further slide to 1.2 by 2070.
The government says the measure to gradually raise the legal retirement age by three months every year, till it reaches 64 by 2030, is “indispensable” in order to balance the pension system and keep it financially viable. While announcing the last-minute decision to use special provision 49:3 of the Constitution to pass the bill without voting in the National Assembly, French Prime Minister Elizabeth Borne said: “We cannot gamble on the future of our pensions. That reform is necessary.”
The change in retirement age from the current 62 to 64 means that people will have to work longer or contribute payroll taxes for a greater number of years to get a full state pension. By this logic of a phased increase of three months every year till 2030, those who were born in 1961 and were due to retire this year will have to work an additional three months in order to get a full pension. Those born in 1968 will have to be 64 and completed 43 years of work when they retire in order to get their dues.
There are exceptions, however. Those starting work between the ages of 14 to 19 will be able to seek early retirement, as will public workers engaged in physically or mentally arduous jobs. The government also says it will put in place a ‘seniors’ index’ to check if companies are making progress in hiring and training seniors so that they don’t get left out as the retirement age increases.
The reform will also put an end to a dozen or so “special regimes” with different retirement ages and benefits for different categories of workers including rail workers, electricity and gas workers, and central bank staff. However, the changes will only apply to new workers in these sectors—existing workers will still benefit from the special regimes.
The minimum retirement age only applies to those who have worked enough years to qualify. French newspaper Le Monde notes that like in the present system, many women who pause their careers to raise children and people who study for longer and start their careers late, must work till the age of 67 to retire with full pension benefits.
The government highlighted the potential outcomes of the pension reform, stating that new retirees will get a guaranteed minimum pension of not less than 85% of the total minimum wage— about 1,200 euros per month at current levels. The government also plans to index the pensions to inflation levels for those who receive minimum incomes, a year after retirement. It says that the pensions of the poorest 30% of retirees will increase by 2-5%. It also argues that while the new system will balance the pension budget by 2030, no reforms to the regime would mean an expected pension fund deficit of 13.5 billion euros in 2030.
Why has this made people angry?
France currently has one of the lowest qualifying ages for a state pension among big European economies. , The Guardian notes, and the government puts in a significant amount to support the social protection system.
The French cherish the retirement system, as well as national healthcare, as it is seen as hard-earned, having been introduced by the National Resistance Council after the Second World War, when the country was reeling from the aftermath of the war.
Generations of workers have accepted high mandatory taxes to fund the pension system because it creates interdependence and guarantees state-backed pension earnings. The new system means current workers will have to work longer to sustain pensions for the ballooning aged population. Life expectancy has also increased— it was 82 in 2020 as per World Bank figures.
Observers also worry that the reform will negatively affect blue-collar workers who often start working young, have shorter life expectancies, or have less optimum working conditions compared to white-collar workers.
Opponents of the reform argue that instead of altering the pension age, the government could have balanced the system through other measures— like increasing payroll taxes paid by workers, taxing the wealthy more, or not tying pensions to inflation. Others also argue that Mr. Macron’s government is amplifying the danger of the system’s projected deficit. The New York Times reported that France’s official body for monitoring the pension system has also said there is no immediate threat of the system going bust, adding that long-term deficits are hard to predict correctly.
Have pension reforms faced such opposition before?
Pension reforms have long been a contentious issue in French politics, having prompted widespread protests in 1995 and 2010. In fact, this is not the Macron administration’s first time facing harsh opposition to pension overhaul. Pension reform has been one of Mr. Macron’s campaign promises since he was first elected in 2017. In 2019, his administration attempted to introduce a different reform which would not raise the retirement age but get rid of the special regimes of benefits and pension ages for different categories of workers. These reforms were also met with large-scale street protests, strikes, and one of the biggest walkouts by transportation workers, impacting public transport. The reform was then stalled as a result of the pandemic.
What’s next?
After Ms. Borne used special powers to pass the Pension Bill in the Assembly without a vote, two Opposition Groups filed no-confidence motions against the Macron government. These motions were scheduled to be heard on Monday, March 20, but are unlikely to succeedin dislodging the government. Opposition parties from across the aisle would have to come together for such a vote to have a decisive outcome. However, one of the motions was filed by a group of parties on the Left while far-right leader Marine Le Pen’s National Rally Party brought in the second one. Another major party, Les Republicains, decided to stay away from no-confidence motions to avoid potential “chaos”.
Meanwhile, protests continued to intensify, turning violent in some places, with the police banning demonstrations in parts of Central Paris. So, far eight coordinated nationwide protests have taken place since mid-January along with regular demonstrations by civilians and a coordinated group of labour unions in various parts of the country.
A new day of nationwide industrial action has been planned for Thursday, March 23. Over 10,000 tonnes of garbage piled up on the streets of Paris as sanitation workers refused to end their strike, also blocking the waste collection plant hosting Europe’s biggest incinerator. Traffic and fuel deliveries were also impacted by protest actions. The left-wing CGT, one of the biggest trade unions spearheading the protests, has asked members to stop work at schools, factories, and other places. Teachers’ unions have also called for strikes this week.
