France’s Pension Plan Strikes, Explained

France is at a pivotal moment, as Parliament votes on President Emmanuel Macron’s plans to raise the legal age of retirement to 64, from 62, despite strikes and wide public opposition.

President Emmanuel Macron’s unpopular plans to raise the legal age of retirement to 64, from 62, are coming to a head this week with a crucial vote in Parliament, despite waves of marches and strikes organized by labor unions nationwide.

Some of the demonstrations have gathered over a million people and they have emerged as a major test for Mr. Macron after his re-election last year, with public opinion polls repeatedly showing that a majority of French people oppose his proposal.

Overall disruptions have been limited, but heaps of trash are piling up in the capital, Paris, because of a strike by garbage collectors, and travel on parts of the city’s transportation system and on the national railway were still disrupted.

All eyes are now on Parliament, where the Senate approved the pension bill a final time on Thursday, setting the stage for a far more unpredictable vote in the lower house, where Mr. Macron’s party does not have enough lawmakers to pass the bill on its own.

The government could ram it through without a vote, guaranteeing passage but infuriating opponents and potentially fueling more trouble. Or Mr. Macron could gamble on a high-stakes vote with an uncertain outcome — and risk a stinging defeat.

Bruno Retailleau, a top senator with the mainstream conservative Republican Party — whose votes Mr. Macron would need — has said the government had a choice between “Russian roulette or the Big Bertha,” referring to the famous World War I-era German howitzer.

Uncollected trash has piled up in Paris because of a strike by garbage collectors.Thomas Padilla/Associated Press

Mr. Macron and his government say they need to change France’s pension system to put it on a firmer financial footing as life expectancy rises and as the ratio of workers to retirees decreases. Opponents, including a united front of labor unions, dispute the need for urgency. They say that Mr. Macron is attacking a cherished right to retirement and unfairly burdening blue-collar workers because of his refusal to increase taxes on the wealthy.

Neither side has shown any sign of backing down. Mr. Macron has said little publicly about the pension overhaul and left his top ministers to defend it. But he has staked much of his second-term legacy on getting it done.

The prospect of a pension overhaul has been a third rail of French politics since long before Mr. Macron took office, prompting large protests in 1995 (which succeeded) and in 2010 (which failed). This is the second time that Mr. Macron’s pension plans have met fierce resistance.

In 2019, during his first term, an effort by Mr. Macron to overhaul France’s generous pension system led to huge street protests and grinding strikes, including one of the longest transportation walkouts in the country’s history. The government shelved those plans after the coronavirus pandemic hit.

A station in Lyon, France, in January. Travel on the national railway system has been disrupted during the protests.Laurent Cipriani/Associated Press

There is a key difference between what Mr. Macron did back then and what he is doing now: His initial project did not involve increasing the legal age of retirement. Instead, he was aiming for an across-the-board overhaul of the pension system’s dizzyingly complex architecture. The goal was to merge 42 pension programs into what he said would be a fairer, unified system, using points that workers would accumulate and cash in upon retirement. But the plans left many confused and worried that their pensions would decrease.

The latest plans are a much more straightforward attempt to balance the system’s finances by making the French work longer, an effort that the government acknowledges will be difficult for some but that it insists is necessary.

France’s pension system relies primarily on a pay-as-you-go structure in which workers and employers are assessed mandatory payroll taxes that are used to fund retiree pensions. That system, which has enabled generations to retire with a guaranteed, state-backed pension, will not change.

France has one of the lowest rates of pensioners at risk of poverty in Europe, and a net pension replacement rate — a measure of how effectively retirement income replaces prior earnings — of 74 percent, according to the Organization for Economic Cooperation and Development, higher than the O.E.C.D. and European Union averages.

But the government argues that rising life expectancies have left the system in an increasingly precarious state. In 2000, there were 2.1 workers paying into the system for every one retiree; in 2020 that ratio had fallen to 1.7, and in 2070 it is expected to drop to 1.2, according to official projections.

Antoine Bozio, an economist at the Paris School of Economics, said that there was no short-term “explosion of the deficit” that needed to be addressed urgently. But “once you’ve said that the system isn’t in danger or on the verge of a catastrophe,” he said, “that doesn’t mean there isn’t a problem” in the long term.

Students in Paris blocked access to a high school in January.Lucien Libert/Reuters

To keep the system financially viable without funneling more taxpayer money into it — something the government already does — Mr. Macron wants to gradually raise the legal age of retirement by three months every year until it reaches 64 in 2030. He also wants to accelerate a previous change that increased the number of years that workers must pay into the system to get a full pension.

Mr. Macron has called the overhaul “indispensable.”

Opponents say that Mr. Macron is exaggerating the threat of projected deficits and refusing to consider other ways to balance the system, like increasing worker payroll taxes, decoupling pensions from inflation or increasing taxes on wealthy households or companies.

Making people work longer, opponents argue, will unfairly affect blue-collar workers, who often start their careers earlier and who have a shorter life expectancy, on average, than white-collar ones. The prospect of pushing back the retirement age has led to protests and intermittent walkouts by workers in schools, public transportation, fuel refineries and other sectors.

“Sixty-four isn’t possible,” Philippe Martinez, the head of the CGT labor union, France’s second-largest, told French television in January. “Let them visit a textile factory floor, or a slaughterhouse, or the food-processing industry, and they will see what working conditions are like.”

Some worry about being forced to retire later because older adults who want to work but who lose their jobs often deal with age discrimination in the labor market.

The plan’s unpopularity also has much to do with pre-existing anger against Mr. Macron, who has struggled to shake off the image of an out-of-touch “president of the rich.”

By making pensions a cornerstone of his second term — he cannot run for a third consecutive one — Mr. Macron has also made them a referendum of sorts over his legacy, and analysts say that he could become a lame-duck president if he fails to pass the pension overhaul.

“That’s why he has not only all the unions, but also a large part of public opinion against him,” said Jean Garrigues, a leading historian on France’s political culture. “By tying himself to the project, opposition to it is heightened, dramatized in a way.”

The government has announced measures intended to mollify opposition, like continued exemptions allowing those who begin working at younger ages to retire earlier and measures to help seniors stay employed.

The government also said it would increase smaller pensions, but that backfired after officials acknowledged that for most retirees, the bump would be weaker than initially announced.

But those concessions were mostly offered as carrots to garner the support of Republican lawmakers, and they have not placated the unions. Some of them have continued disruptive strikes to force the government’s hand.

Loic Venance/Agence France-Presse — Getty Images

The Republican-controlled Senate, France’s upper house of Parliament, passed the bill last week; the National Assembly had previously failed to do so before a deadline.

On Wednesday, a joint committee of lawmakers from the Senate and from the National Assembly, the lower and more powerful house, agreed on a common version of the bill, which the Senate approved on Thursday ahead of the vote in the lower house.

Mr. Macron’s party, Renaissance, and its allies no longer enjoy an absolute majority in the National Assembly. They have to rely on the Republicans, whose leaders have said they could support the bill but whose lawmakers appear more divided, meaning the vote could go down to the wire. Even members of Mr. Macron’s party have expressed discomfort with his proposal.

The government could guarantee a legislative victory for Mr. Macron by using a rare constitutional tool to ram the bill through without a vote. Prime Minister Élisabeth Borne used this tactic several times in the fall to enact finance measures, but the government has said repeatedly that it wants to avoid using it in this case.

The procedure would expose the cabinet to a no-confidence motion — one that would be unlikely to pass, because even Republican lawmakers opposed to the pension bill do not want to topple the government. Still, using this tactic with such a contentious and consequential piece of legislation could further inflame tensions on the streets and complicate Mr. Macron’s second term.

Constant Méheut contributed reporting.

This post was originally published on NY Times

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