Vol. 45 No. 9 · 4 May 2023

Macron v. Millions

Jeremy Harding on the pensions crisis in France

3053 words

Pensions​ – and ‘the fiscal impact of ageing’ – have long troubled the EU. A European Commission paper published in 2016 noted with relief that ‘most EU member states’ were reforming their pension systems. France is one of them. During his first term in office Emmanuel Macron envisaged an ambitious reform plan, but Covid-19 put paid to it. Re-elected in 2022, he put a different plan on the table; at its core is an increase in the retirement age from 62 to 64. It has been predictably unpopular. Pensions rank high on the list of French state expenditures. They are one of the cornerstones in France’s edifice of public provision, which is why the sound of drilling and hammering sets most citizens’ teeth on edge.

In 1993 a conservative government, cohabiting with a socialist president in the Elysée, increased the length of time an individual retiring at 60 had to work in order to qualify for a full pension from 37.5 to 40 years. It also changed the way the value of a pension was calculated: no longer on the most profitable ten years of a working person’s life, but on the most profitable 25. Édouard Balladur was the prime minister who drove this reform. When he ran for the presidency not long afterwards, he lost in the first round of voting. Over the next fifteen years pension disbursements fell by about 6 per cent. But not for public sector workers, whose rights were barricaded by strong levels of trade union membership and a residual sense that the public sector was vital to republican values.

Not everyone agreed. After Jacques Chirac succeeded Mitterrand in 1995, he and his prime minister, Alain Juppé, tried to reform civil service pensions and triggered the most impressive round of strikes in France since 1968. For nearly three weeks large parts of the country were at a standstill. Private sector workers backed industrial action because the government was also proposing to thin down other social security benefits. Juppé had to abandon his pension reform, but many of his inroads into other benefits became law.

A lull followed until 2003, when the requisite number of years spent paying into the system in order to retire on a full pension was increased to 41. (The full UK state pension can be drawn after 35 years of contributions, currently at the age of 66.) The usual protests ensued, but Chirac got his way. Like Macron, he justified reform on the grounds that it was the only way to retain the core principle of France’s system – that people in work pay for people in retirement, with top-ups from employers (including the state) – and avoid a drift into a largely private system with managed pension funds. In 2010, during Sarkozy’s presidency, the retirement age was raised to 62. Despite a flurry of strikes and stoppages, and a dozen nationwide demonstrations across six months, the unions, whose membership was already falling, failed to hold the pass. Every government since 1993 has suggested that its tweaks would sort out the pension deficit for decades to come, but even though the fiscal impact of ageing was widely understood, niggling away at pension entitlements was anathema: higher taxes on wealth and top-of-the-range incomes seemed preferable to the unions and much of the public. But in 2014 the government of François Hollande, Sarkozy’s socialist successor, introduced a gradual increase in the paying-in period required for a full pension: from 41 years it would rise, year on year until 2035, to 43. An individual’s contributions also became marginally more expensive. Again, there were protests and stoppages, but battle-weariness had set in.

Macron’s project, presented in January, reawakened the public’s resolve to fight it out. In addition to raising the retirement age by two years, the phased-in transition from 41 to 43 years of contributions envisaged during Hollande’s term would be accelerated and apply to larger numbers of citizens (those born after 1964, as opposed to 1972). There were now very few exceptions – most on hardship grounds – for those employed in public service or contracted to the state. Allowances were made for people who entered employment early: anyone who began work between the ages of 16 and 20 could retire before the age of 64, although, paradoxically, someone who began at 16 with the right to retire at 58, which the new proposals conferred, might still have to pay into the system for 43 years. But the arithmetic (16 plus 43) suggests that this would delay their right to retire until they were 59. This was one of many anomalies in the draft legislation, which was greeted with howls of dissent in the National Assembly from the left alliance and Marine Le Pen’s far right party. The centre right – the sorry remnants of Gaullism – were torn. On the one hand, they were keen to undermine Macron’s relative majority; on the other, they were ideologically committed to reducing France’s deficit by cutting social benefits. All parties set about tabling amendments and new clauses: measures to compensate women for contributions unpaid as a result of raising children; a new tranche of early retirement for people who came onto the job market at 21; a special fund for people doing certain types of work (night shifts, jobs involving physical and mental wear and tear) – the list went on.

The public and most of the press were suspicious of the reform from the start, simply because it meant revisiting the mystifying labyrinth of the pension system. For the press, it was a question of extra homework (if you’ve followed so far, you’ll see what I mean). For working people, it was a matter of understanding how the changes might affect them. Trade union actuaries and compute-your-pension calculators published in the French media have done sterling work, but nobody can say for sure what lies in store, except that many are liable to lose out. When dissident economists looked into Macron’s promise of a €1200 gross monthly pension for new retirees, the terms of eligibility, along with the discounts that offset other social security benefits, seemed to rule out large numbers of contributors. Thomas Piketty has suggested that fewer than 3 per cent of citizens would qualify.

Before long you start to worry that your reckoning of your own pension entitlements and everyone else’s might be based on a mistake, or bad signage by the government and civil service. It’s not unlike trying to make your way through the elegant, renovated Gare St-Lazare to the Metro platform that will put you on the Ligne 3 heading east: one pass down the stairs, a turn around the stairwell, up the stairs again, down for the last time, until you spot the right corridor. Older, grubbier arrangements are easier to negotiate. One of Macron’s grand ambitions has been to shine light into darkness, but kicking up the political dust, as his measures have done, only creates more opacity.

This is true not just for the main component of the pension system, the ‘general regime’, which processes the great majority of French pensions, but the dozens of ‘special regimes’, most of which (energy workers, notaries’ clerks, Parisian transport staff etc) are being done away with, in the name of a unified system. Even Macron’s people find the granular consequences of their reform project hard to grasp. A staggering twenty thousand amendments were made to the bill in the National Assembly. Most were tabled by the left bloc and designed to smother the legislation at birth. But some – on pension disparities affecting women, for example – made key corrections to the government’s assumptions. As the detail became harder to follow, the battlelines became stark: Macron claimed the bill would rescue the system from bankruptcy; his array of opponents claimed he was dismantling the providential state. The trade unions’ message to their membership and the public was aggressively simple: this is another blow to working people’s rights. Nobody needed much persuading. Even staff at the Opéra de Paris and the Comédie Française were furious.

Commentators in France have denounced the reform process as a coup, or at best a sleight of hand. The plan was put forward as a ‘social security budget adjustment’, which ensured that there would be a time limit on parliamentary debate. If the deadline elapsed without a decisive vote, the measures could be passed by decree. This is exactly what happened. In the third week of March, having survived two votes of no confidence, the government drew further discussion to a close by invoking Article 49.3, which effectively forced the measures into law. Ten days earlier, a protest against the reforms had brought millions onto the streets. It was the sixth day of action since January, with strikes in public transport, the chemicals industry and at oil refineries; more followed. Thousands of tonnes of rubbish piled up in the streets of Paris.

As the Constitutional Council prepared to sign off on the law, opponents had to keep the protests ticking over. Several more days of action followed. Both before and since the decree was issued, demonstrations have been met with large police deployments. Repressive violence is a worry for participants, as it was for the gilets jaunes. The extent of injuries inflicted by police four years ago has not been repeated, but there have been several serious incidents, one involving a demonstrator who was hit by a flash ball and lost a testicle. The numbers – and the ever more menacing kit – of riot police give a rough idea of the Interior Ministry’s approach to social movements that come out against government policy.

Like Christophe Castaner, his predecessor as minister of the interior, Gérald Darmanin is happy to ramp up the authoritarian tendency of the administration on demand. He recently added to the undesirable category of people referred to as ‘islamo-gauchistes’ – anyone with reservations about the French history syllabus, the virtues of colonialism, immigration policy, foreign policy, or the unimpeachable right of Charlie Hebdo to offend domestic minorities – by identifying another, more insidious enemy. He called it the ‘intellectual terrorist’: anyone with political opinions to the left of the Parti Socialiste.

Many on the left suspect that Darmanin was behind the arrest of Ernest Moret, a radical French publisher, at St Pancras station, as he made his way to the London Book Fair last month. A foreign rights manager at La Fabrique, Moret had bought Andreas Malm’s book How to Blow Up a Pipeline. He was questioned on other possible thought crimes, including his view of Macron’s presidency. Whoever was responsible for Moret’s arrest – and it may well have been Darmanin – has pressed the right button: the thought is as good as the deed.

At rallies and marches, physical policing à la Darmanin, with its bristling ranks of law enforcers, feels more intimidating than his taste for thought-policing. Darmanin is a 40-year-old prodigy with long-term ambitions to synthesise right-wing populist ideology and a materialist vision of order, on the streets, in schools and universities, in gender studies, even on the football pitch: in 2012 he came out against Fifa’s suggestion that Muslim women players should be allowed to wear hijab during matches.

Darmanin’s intellectual terrorists include environmental activists. Midway through the anti-reform protests, in the third week of March, the Ministry of the Interior banned a demonstration against a mega reservoir for intensive-agriculture farms east of La Rochelle. The organisers failed to get the ban lifted but the demonstration went ahead anyway. Roving teams of gendarmes on quad bikes enveloped the protesters in clouds of tear gas. In the clashes that followed, riot police prevented ambulance workers from reaching the injured demonstrators. Darmanin is a figure to watch as Macron’s second term unfolds amid waves of ill-feeling and contestation.

On​ 13 April, a day before the Constitutional Council’s verdict on pension reforms was due, there was another mass mobilisation. The turnout had dipped, despite students joining the dwindling ranks after Article 49.3 was invoked. Younger people are disturbed by the government’s use of the decree, an instrument the left has fallen back on more often than the right. In Mitterrand’s second term, his prime ministers Michel Rocard and Edith Cresson used it on more than twenty occasions. Lycéens and undergraduates get the point that it isn’t unconstitutional, but they’re not convinced it’s democratic. Students from Inalco, roughly the equivalent of SOAS, carried a banner with ‘No’ in dozens of different languages. The marchers passed the seat of the Constitutional Council in rue Montpensier, near the avenue de l’Opéra. Protesters had blocked the entranceway with dustbins earlier in the day. These had been removed; instead there were riot police guarding the gates as the council remained in deliberation.

Students are surprised if you ask them why they don’t mind the prospect of shelling out money for their retired elders. ‘People my age?’ I’d insist, fixing them with what I hoped was an incredulous look. No, it was a case of ‘intergenerational solidarity’, one lycéen argued; he hoped that a younger generation would do the same for his cohort when its time came. Yohan, a student reading history and history of art at Panthéon-Sorbonne, agreed – but felt that pensions stood for other kinds of solidarity, including compulsory contributions to France’s ragged safety net for disadvantaged citizens. There are plenty of attendant issues that vex students, among them the government’s acquiescence to the climate crisis (why doesn’t Macron push for a European tax on aviation fuel?) and the privileges of the super-rich (why did Macron do away with the wealth tax on financial portfolios that could have helped to reduce the pension deficit?). Opposition to the reform is also a sublimated plea for climate justice, modest lifestyles, redistribution of wealth, the ‘sobriety’ that Macron has asked the French to exercise in their energy consumption, and of course ‘democracy’. The use of Article 49.3, Yohan said, was the last straw for people his age. I find it hard to shake off the worry that young people born to families on average or low incomes are locked in a fatal dance with the elderly, and that the price for the junior partner is high. As the palm court orchestra plays on, only the children of wealthy parents stand to do well.

On 14 April, the Constitutional Council gave Macron the green light, as everyone expected. Only a handful of clauses were overturned, including a plan to encourage businesses to hang on to older employees: maverick measures, in the view of the council, that didn’t qualify as part of a ‘budgetary adjustment’ law. That was a minor defeat. But the extension of the retirement age to 64 is a victory for Macron. The collective sigh of defeat in France was followed by a sharp intake of breath. Macron promulgated the law within hours, at roughly 8 p.m. on the day the council ruled in favour (or in the dead of night, as his enemies put it). He was in a hurry to move on, but it may not be so easy. A call from unions and social movements to come out on 1 May with a ‘tidal wave’ of opposition to the law was anticipated on 20 April by a dress rehearsal with gaps in train services and a spontaneous appearance by three hundred strikers inside the Paris branch of the Euronext stock exchange.

Alongside the smouldering anger about Article 49.3, there are doubts about the cost-saving virtues of the reform, and about Macron’s political judgment. Why, for example, when the real retirement age is already increasing, would he want to raise the threshold by two years? The number of people in further education in France, which includes students in technical training, has risen from around two million in 2000 to three million: all will enter the workplace in their twenties and some may not retire before the age of 67. On the face of it, the reform eats into the rights of less well-paid employees with shorter life expectancy: a 35-year-old man in management can expect to live six years longer than his working-class counterpart; the difference for women is three years; more than 30 per cent of working-class pensioners already suffer from some kind of incapacity when they retire.

Macron’s desire to balance the books has also come under scrutiny. His prime minister, Élisabeth Borne, has talked up the possibility of a €150 million pensions deficit over the next ten years. In 2020 the system was more than €10 billion in deficit. In 2021 and 2022, freak years, it was in surplus. But predictions for this year and the decade ahead are less rosy, with a €20 billion shortfall envisaged by 2032. These estimates, probably more reliable than Borne’s worst-case scenario, are the work of the Conseil d’orientation des retraites, an independent body that monitors the system’s performance and its prospects. In their longer-term forecasts the fund returns to near equilibrium, perhaps on the cusp of 2040, or at any rate by 2070, even though the number of working contributors for every pensioner – according to the DREES, which provides official statistics for health and social ministries – will have dwindled to 1.2. In its immense 2021 Ageing Report the European Commission foresees a slow but steady fall in France’s pension expenditure as a percentage of GDP after 2030.

It makes you wonder why Macron was willing to take this political risk, with inflation running at 7 per cent in the last quarter of 2022 and food inflation close to 15 per cent so far this year. Did he decide it was clawback time for the generous round of public finances paid out at the height of the Covid crisis and then a second in response to energy price hikes driven by Putin’s war, which forced the government to intervene in domestic markets? Brussels, of course, is hoping that Macron, its golden boy, will bring France back into line with the Maastricht Treaty rule of 1992: a public deficit no higher than 3 per cent of GDP. The EU allowed his predecessors plenty of leeway. Thirty years on, France is not the only country posting a deficit above the Maastricht threshold. But if anyone could lead the way back to compliance it was thought to be Macron. He’s risen to the challenge and damned himself in the eyes of French voters who cast their ballots for his presidency to keep Marine Le Pen out of the Elysée.

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