Photo by Ev, Unsplash.
In early January, President Macron proposed a move to increase the official retirement age from 62 to 64, sparking mass strikes in France. This is the seventh time that efforts have been made to reform the country’s retirement age. On paper, these reforms can bring positive impacts to France. Notably, it would certainly reduce France’s debt burden because it would reduce the amount of individuals eligible for a full state pension. However, there are extensive negative impacts as well, considering how pension reforms have been a political taboo in France. There has been a rise in movements over the years like the ‘gilet jaunes’ (yellow vests) movement that started in 2018, where they conducted strikes over many important issues. The public outroar from this issue is expected to cause Black Thursday, with nationwide strikes for the entire day (January 19). Simultaneously, these reforms could possibly widen inequality. This article will discuss the impacts of the retirement reforms in France.
First, the reforms might bring positive impacts for France. Considering France has one of Europe’s most generous pension systems, President Macron has claimed that it is necessary to overhaul the country’s pension system. France’s debt-to-GDP ratio stands at 5th highest among European Union (EU) countries, with pensions being one of the reasons for the extensive national debt. Moreover, France had already sustained many deficits to fund stimulus packages during the pandemic. The number of retirees relative to active workers has increased over the years, with the ratio falling to about 1.7 workers per retiree from 4 workers per retiree, making it necessary for France to conduct these reforms. Many other European countries have had to do the same, with some countries doing it to a more severe extent, such as Italy and Germany raising their retirement age to 67 years. Also, the increase in retirement age will be compensated with increases in the minimum pension to about 1,200 euros a month. Hence, it can be argued that these reforms are necessary to bring benefits to France in the long term.
However, these reforms can bring negative impacts to France. The negative impacts of these reforms do outweigh the positive impacts. To start, these reforms can worsen inequality, because most of the poor usually start work earlier in life, which in a way gives them the right to a full pension when they reach 62 years of age, since they have worked for a longer period of time. Many opposition parties argue that there are other methods in reducing the budget deficit that might bear less negative impacts. That is why there are suggestions for alternative methods like cutting pensions for the better off, possibly for those who exceed a set amount of monthly household income.
Another more immediate negative impact is the responses of the public. Over the years, every attempt to change the retirement age has led to mass opposition on the street, since such reforms have always been a political taboo. The Black Thursday is one such example, where rival unions have united for the first time in 12 years, and their demonstrations have led to violence in France. Polls have shown that many oppose the reform as individuals from the transport, energy, oil, education and health sectors all joined in on the strike on January 19. Another strike is planned for January 26. Clearly, the repercussions are extensive, with transport across the city disrupted, schools closed and care for patients in hospitals being limited. As such, these unpopular reforms have led to violence and disruption across many important sectors.
Moreover, if these reforms do not go through, the political impacts could be severe as it might prove Macron’s inability to secure support and the lack of confidence the public has towards him. Especially since in the previous elections, Macron lost the absolute majority. Passing this is important to prove Macron’s support and it could help advance his pro-business agenda.
As such, these retirement reforms might be necessary, and it could bring benefits for France in the long term, but in the short term, there may be extensive negative implications, as seen from the public outroar against the reform. Only time will tell whether these reforms will indeed go through or not, because despite the vehement opposition, President Nicolas Sarkozy did manage to raise the retirement age in 2010. President Macron might be able to do the same, and legitimise his agenda.
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