Letter From Paris: Anatomy of a Crisis — Retirement Reform in France

A crushing defeat for the French president, many angry people and a country convulsing into chaos. Let’s rewind the video back to early 2023. 

There was a feeling of déjà vu when observing the political and social turmoil going on in France. Once more the “Street” is in an uproar and the deputies in the Assemblée Nationale are fighting like cats and dogs. This time the cause was an attempt  by French President Emmanuel Macron to carry out retirement reform. The prospect of the legal age to retire being raised  from 62 to 64 provoked a storm. It was the cornerstone of Macron’s plan, but also the most controversial.

For an observer from abroad, this situation is almost incomprehensible. Why would the French refuse to retire at 64 when other countries are adapting to demographic changes such as a longer life expectancy and the aging of the population?  

Other French presidents, like Nicolas Sarkozy or Jacques Chirac, have also tried to reform the system but without success. Retirement reform occupied a central place in Macron’s electoral campaign at the outset of his first mandate in 2017. He had a vision of a system of répartitions (contributions), which would be largely complemented by capitalization. It means each individual receives a pension that comes from the capital accumulated in that person’s account.

Macron explained that the repartition system is not tenable financially.  Since this system is based on the principle of an active population paying for retirees,  it works well when the ratio of active population versus retirees is right. The aging of the population puts too much of a burden on the active population. In the 1960s, there were four actively-employed persons for one retiree. In the 1970s, the ratio was three to one. Today that ratio has fallen to 1.7 active persons per retiree. The system is doomed to run eventually into a wall, Macron believes.  

The state has to make up for the difference since there is an imbalance between the amount of contributions and the pensions to be paid out. The retirement system in France is cumbersome and costly. It represents 14 percent of the Gross Domestic Product (GDP), which is the second highest in the European Union behind Italy. As a comparison the cost of the retirement in the US is only 7 percent of GDP.

For the French the idea of working two more years is unacceptable. Retirement reform has become an existential confrontation between the government and 65 percent of the population. It also seems ill-timed with the interruption of oil supplies from Russia causing an energy crisis, roaring inflation and an unprecedented drought. 

Retirement reform is, in fact, unattainable because the proposed changes are going much further than just retirement — they are also touching on many other issues such as labor laws, inequality between men and women, insufficient purchasing power for many people unable to make ends meet. 

It also reflects the new way people relate to work after the COVID pandemic. The reform is considered by the left-wing trade unions as unjust.  And on top of all that, add an utter dislike for Macron who has only a 36 percent approval rating at present. 

What are the main points of the reform? 

Eliminate the régimes spéciaux or  “niches” of long-established privileges of certain groups of people

There are 15 régimes spéciaux.  Among them, employees of utility companies like EDF (Electricity) and GDF (natural gas), Paris Opéra and Comédie Française employees,  RATP (Paris subway and bus system ) national police, clerks in notaries offices, members of the Assemblée Nationale and of the Senate, SNCF (railroad) workers, etc. The régimes spéciaux notch a 30 billion Euros deficit each year

Long careers creating a confusing situation

The  government made a number of concessions about the cases of someone who started work at age 19, or of an apprentice, who may have started at a very early age such as 14. It would have been much simpler and saved the government lots of headaches, not to quote a retirement age like 64 but rather set the requirement of 172 quarters (or trimesters), corresponding to 43 years, to qualify for a full pension. This was probably the worst error. They should not have set an age for retirement but just increased the number of years of contributions from 42 to 43. 

Minimum pension and “protection” of stay-at-home mothers

As a rule women make 1/3 less money and consequently, retirement income, compared with men. So an effort was made to add eight quarters of maternity leave and child-rearing leave to the calculation of quarters. The minimum pension will be 1,200 Euros with an additional 100 Euros. It is still pitifully low. With that amount, how can a retiree live? Many have to resort to eating in Restaurants du Coeur, the French version of soup kitchens.  

Raising the low ratio of seniors’ employment

In France, only 56 percent of 55 to 64 years-old or “seniors” are employed, versus 76 percent In Sweden for example. In Denmark, the retirement age is indexed to life expectancy. The number of seniors has doubled in the past 10 years. In that country, one retires when one wants. Danes find that part of their identity is linked to their work. 

The reform is supposed to take place gradually and will not be completed until 2035. There is a grandfather clause for people still employed.  

President Macron put Prime Minister Elizabeth Borne in charge of retirement reform. First she led three months of talks with the Trade Unions, followed by two weeks of debates in the Assemblée Nationale. Day after day the TV showed Borne on the floor of the legislative body, confronting rowdy members of the NUPES (alliance of left wing LFI or La France Insoumise, headed by Jean Luc Mélanchon, the Communist party, the Socialist party, the Europe Ecology party (the Greens or EELV) plus  a couple of smaller partners.)

One of the most vocal and disruptive NUPES deputy is François Ruffin, a school mate of Macron in Amiens. Marine Le Pen, now comfortably sitting at the head of 89 deputies in the National Assembly, is staying above the fray, watching the gesticulations of the deputies. Many commented that it was an appalling spectacle.

The NUPES advanced about 15,000 amendments out of a total of 20,000. It appeared that their objective was, in fact, the obstruction of the whole legislative process, in order to force the government to act by the 49-3 Executive Order. What happened was that, after two weeks, only two of the of the 20 articles of the proposed law had been debated. Article 7 — the most important since it concerned raising the legal retirement age from 62 to 64 — was not even addressed . 

The next stage was intended to be a debate at the Senate. Since the beginning of the Fifth Republic, the 348 member-strong Senate is dominated by right wing parties . They are the Renaissance (the new name of LREM — La Republique en Marche ), Les Republicains, and the Union Centriste . It was no surprise that the debates were calmer and even continued during weekends.  

To make sure that the work was completed by the deadline, another article inscribed in the Constitution — 44-3 — helped speed up the debates of the proposed retirement reform. 

While the parliamentary proceedings were going on, the popular anger grew. Seven days of vigorous protest brought out more than one million demonstrators in small and large towns daily. In the crowd, one could see a few young people. Hard to believe that 14-year olds would already be worrying about their retirement benefits set to materialize 50 years down the road.

But marching in the street is not sufficient to get results.

Other tools were used by the unions to exert power such as strikes of public transport (the worse one for the public was on Christmas Eve); targeted power outages (Gerard Larcher, president of the Senate, had his own electricity cut off) for four hours in early March; blockage of refineries; and closing the methane terminals where liquefied natural gas arrives in France. 

The shut-down of the waste incinerators serving the Paris region, and the strike of garbage collectors turned the capital into a disgusting  (and smelly) mess of more than 10,000 tonnes of garbage littering sidewalks and streets. Anne Hidalgo, the Socialist mayor, refused to interfere and help with the waste removal.

Some other countries look at France with envy for being able to fight for the preservation of what they deem essential to their quality of life and to which they are incredibly attached. 

The retirement reform proposal is far from perfect but the French government can hardly afford the luxury of doing nothing. To express an opinion on this most important issue of Macron’s mandate, one should first place it in its societal context.  

The government has been trying to help the population: dozens of small checks have been given to the most vulnerable groups of the population. Students can eat a decent meal for only one euro. Financial assistance is provided for people, who have to use their car to go to work, or can ‘t afford to keep warm in the winter. The cost of electricity is capped so that the boulangers  can continue baking their famous baguettes . These dozens of small checks have added to 43 billion Euros to the national debt. The inflation has been kept in check at 6.5 percent, which is the lowest in Europe. These measures deserve acknowledgement .

One might say that inflation has nothing to do with retirement reform, but it does. The popular anti-Macron surge is greatly due to the fact other economic problems are bundled up with the general resentment caused by retirement reform.

Macron’s government has been criticized for lacking a pedagogical sense in promoting the reform. It is widely accepted that the proposal is utterly confusing. Even a professor at Sciences Po and a researcher at CNRS (Centre National de la Recherche Scientifique) made that comment about several  of the provisions of the reform. 

The French find the president aloof and distant. 

On Jan. 18, at a time when the reform was the absolute top priority in everybody’s mind, the president decided to take 11 key ministers on an official visit to Spain. Anti-retirement public opinion turned sour. 

In mid March, the president attended environmental conferences in four countries of central Africa. It provoked the same outrage among the population.

Trade unions wanted to meet with the president. This was refused by the Elysées palace. Macron had delegated his authority to the Prime Minister in this matter. This is typical of France — the French keep criticizing Macron but they will not talk to anybody but him

On March 15 , the Senate passed the reform project. The text then went to a commission paritaire of seven deputies and seven senators for approval. 

On the eve of the final and crucial vote scheduled to take place in the Assemblée Nationale on March 16, Prime Minister Borne sounded very confident that the reform would pass with a majority vote. The suspense was still intense though. 

But on March 17, there was a coup de théatre — the government did not have a majority. Several deputies and a handful of “frondeurs” from the Right and the Center voted against the reform. In a deafening noise, Borne had to announce that the government reluctantly had to use Article 49-3.

The reaction was immediate: riots, violence, and destruction of shops, bus stops and more were contained with difficulty by the police. Multiple arrests were made. The Place de la Concorde and the Champs Elysées are now cordoned off by the police..  

This is just the beginning. The future looks bleak. The expected votes of confidence may not succeed, but the task of the Macron’s government going forward seems enormous.

Editor’s Note: This is the opinion of Nicole Prévost Logan.

About the author: Nicole Prévost Logan divides her time between Essex and Paris, spending summers in the former and winters in the latter. She writes an occasional column for us from her Paris home where her topics will include politics, economy, social unrest — mostly in France — but also in other European countries. She also covers a variety of art exhibits and the performing arts in Europe. Logan is the author of ‘Forever on the Road: A Franco-American Family’s Thirty Years in the Foreign Service,’ an autobiography of her life as the wife of an overseas diplomat, who lived in 10 foreign countries on three continents. Her experiences during her foreign service life included being in Lebanon when civil war erupted, excavating a medieval city in Moscow and spending a week under house arrest in Guinea.