France’s existential pension-reform battle

France’s existential pension-reform battle

Unions and workers have declared war on Emmanuel Macron’s plans to create a centralized system.

By JOHN LICHFIELD 12/3/19, 5:37 PM CET Updated 12/6/19, 5:00 AM CET

https://www.politico.eu/article/france-existential-pension-reform-battle-emmanuel-macron-strike-state/

The potential reform is still far off, with final proposals expected after Christmas and a draft law due to be presented early next year. | Jacques Demarthon/AFP via Getty Images

John Lichfield is a former foreign editor of the Independent and was the newspaper’s Paris correspondent for 20 years.

PARIS — There is a French speciality as emblematic as camembert, cognac or champagne — the pre-emptive strike.

Starting Thursday, strikes on the railways, the Paris Metro and bus services are expected to bring the country's capital to a standstill as militant rail unions — but also lawyers, teachers, nurses, refinery workers, truck drivers and others — take to the streets.

The object of their incandescent rage? A proposed, and as yet unpublished, reform of state pensions pushed by President Emmanuel Macron, who wants to get rid of the country's countless exceptions and specialized pension regimes and create one centralized system.

The potential reform is still far off, with final proposals expected after Christmas and a draft law due to be presented early next year. If agreed, the reforms won't take effect until 2025. (They will most likely be delayed for many years after that.)

Macron sees himself as an elected revolutionary, not a politician.

So why have thousands of rail union members, but also lawyers, teachers and nurses and others, declared war while peace talks continue?

In France, politics spills onto the streets more rapidly than in any other Western democracy. Unlike the uncontrolled, leaderless Yellow Jackets protests that began last winter, union-led grèves and marches are often a form of street theater: The unions protest; the government makes concessions; the honor of both parties is upheld.

On this occasion, however, the dispute is likely to drag on and escalate. For both sides, the stakes are high.

For the more radical unions, the strikes are a chance to recover from a series of defeats and their repudiation by the original Yellow Jackets movement. For Macron, it is a chance to claim victory where previous presidents have retreated or compromised.

Critics object the result won't be a universal system, but a system with 42 exceptions.

At present the country has 42 different regimes — including 12 in the SNCF, the state-owned railway, alone — and as a result, a jumble of rules and exemptions. The comparatively poor sometimes subsidize the well-off. Many people work beyond the official retirement age of 62 and end up with pensions of less than €1,000 a month.

Women, farmers and the self-employed, in particular, suffer. By contrast, railway workers retire, on average, at 58 with a pension of over €2,100 a month. Train drivers retire at 53-and-a-half and can take pensions of up to €3,000 a month.

There is, however, no blazing pension emergency. There have been five piecemeal reforms of state pensions in the last 25 years. The finances of the system have been bandaged and propped up.

After each previous attempt at reform, the gold-plated special regimes survived. The last time that a government tried to abolish them, in 1995, the country was brought to its knees by rail and Metro strikes that lasted for weeks.

So why has Macron picked a fight on a hazardous, important but less-than-burning issue? Precisely because previous governments have failed.

Macron sees himself as an elected revolutionary, not a politician. He wants to change the way the country thinks. He wants to prove that, despite concessions to the Yellow Jackets, he is still capable of reconstructing France.

Vive la révolution

There are good arguments for pensions reform. French people work hard, if they work at all, but France as a whole puts in fewer productive hours than any other OECD country. Early retirement is one of the main explanations.

But Macron and his government have largely failed to make a convincing case for their proposed changes.

An IFOP opinion poll published by the Journal du Dimanche last week suggested that 76 percent of the French support change but 64 percent don't trust Macron to make the system fairer.

The president wants a points-based system, in which every French person would have their own pension “account” that could transfer from job to job. The minimum pension would be €1,000 a month.

Fine in principle, say the nurses and doctors, lawyers and teachers, but we have our own state systems that currently lose no money. If we are lumped in with the loss-making regimes, we will end up paying more or taking lower pensions.

Not fine at all, say the railway and Metro workers. We have been earning lower wages than our counterparts in other countries because we could retire early on good pensions. Now you want to take that away from us.

A month ago, Macron’s government hinted at a compromise that would, in effect, have delayed the reform well into the second half of the 21st century. This idea — a “grandfather clause” to preserve the rights of those already in work — has now been withdrawn without ever being formally proposed.

Instead, the government has floated the idea of conducting negotiations industry by industry, or profession by profession, to delay the de facto start date well beyond 2025. Critics object that the result won't be a universal system, but a system with 42 exceptions.

Throughout, Macron has promised that there will be no change in the “official” retirement age of 62. He originally suggested that there should be a “pivot age” of 64, when people could retire and take a smaller pension or carry on and earn a larger one. (Although he abandoned the idea in September, Prime Minister Édouard Philippe has now revived it.)

The government originally insisted that the reform was driven by fairness and common sense, not by money. It has now produced a disputed report that suggests the system will be €17 billion in the red by 2025.

For Macron and his government, the main concern is to prevent another long, attritional winter of discontent.

These zigs and zags have annoyed the moderate trades union federations, like the CFDT, which support the principle of reform. And they have strengthened the hand of the militant federations like the CGT, FO and SUD, which oppose any change to the current system.

The rail branches of the militant union federations lost the battle to prevent reforms of the state-owned network agreed last year. They suspect the pension reform is part of a drive to prepare the railways for privatization.

They want to force the withdrawal of the whole idea. They want to defeat Macron — and to be seen to defeat him where the Yellow Jackets failed.

For Macron and his government, the main concern is to prevent another long, attritional winter of discontent. But they also remain determined to rescue some sort of slow-motion reform so as to justify claims of a “historic victory.”

In other words, the pensions strike is no longer solely about pensions, nor about common sense or compromise. It has become an existential battle over who runs France and how much longer Macron can claim to be a revolutionary.