Emmanuel Macron’s government presented a plan to gradually raise France’s minimum retirement age to 64 by 2030 from 62, sparking anger among labor unions who immediately called for strikes to protest the reform.
(Bloomberg) — Emmanuel Macron’s government presented a plan to gradually raise France’s minimum retirement age to 64 by 2030 from 62, sparking anger among labor unions who immediately called for strikes to protest the reform.
Making the French work longer is essential to boost relatively low employment rates among seniors and avoid persistent deficits in a public system funded by worker contributions, the president has argued. Labor organizations say it will unfairly penalize the low-skilled and least wealthy who began working early in life.
“The pension system is not in danger, nothing justifies such a brutal reform,” Laurent Berger, the head of the moderate CFDT union, said alongside leaders of other labor organizations following a meeting in Paris.
Prime Minister Elisabeth Borne told a news conference earlier on Tuesday she was aware the reform raises fears but said that it was “a plan of fairness, a plan that brings social progress.”
The unions called for a first day of strikes and demonstrations on Jan. 19 and said this was the beginning of a “strong mobilization.”
The showdown around what French officials have dubbed “the mother of all reforms” is set to be a defining moment in Macron’s second five-year term as French leader.
If the 45-year-old forges ahead, he’ll likely face the kind of paralyzing upheaval that accompanied — and sometimes defeated — his predecessors’ attempts to alter laws affecting labor and retirement. If he backs down, it would undermine his decade-long drive to drag France through a pro-business transformation.
The government plans to submit the bill to parliament in February and may ultimately need to use a special constitutional measure to bypass a vote if it can’t convince some opposition lawmakers to support it.
Read more: Macron Stakes Economic Legacy on Pension Reform Fight
Macron already withdrew a different proposal for pension reform in 2020 after months of demonstrations and strikes. At the time, he cited the Covid pandemic as the reason.
The gamble in 2023 comes at a difficult juncture for the French economy as it wrestles with soaring power prices, and as inflation weighs on households and businesses.
Read more: French Government Expects to Eliminate Pension Deficit by 2030
Public finances are also strained after massive spending during the pandemic and the energy crisis. Without changes to the retirement system, it alone is set to record an annual deficit of as much as 0.8% of annual economic output during the next 10 years, according to France’s Pensions Advisory Council.
In an effort to build consensus, Borne dropped the proposal Macron initially touted during his election campaign to raise the minimum retirement age to 65. To meet the objective of financial balance, she said the government will instead accelerate the implementation of a previous overhaul that gradually increases the minimum number of years of contributions to 43. The age at which people can retire with a guarantee of a full pension will not be changed from 67.
The prime minister also said the government would make other changes to ensure around 40% of people can still retire earlier than 64, including those who began working young or suffer from bad health due to their jobs.
The concessions respond to some of the demands of the conservative Republicains party, which has said it could back the pension bill if there are guarantees on minimum retirement incomes and the age cut-offs are not raised too far or too fast. Securing that backing would give Macron a large enough majority in parliament to avoid using a controversial article in the constitution, called 49.3, that allows bills to pass without a vote.
A large majority of French people oppose the plan, however, and unions have reiterated opposition to even a small increase in the minimum age. According to a Jan. 4 survey of 1,005 people by pollster Elabe for BFM TV, 47% want the minimum age to remain at 62 and another 25% say it should even be lowered.
“It hasn’t escaped us that all labor unions are opposed to raising the legal minimum age for retirement,” Borne said. “But our responsibility is to preserve our pension system.”
Falling Approval
Labor unions argue there are other options to re-balance the system, including encouraging or obliging French companies to keep on older workers, or reducing Macron’s tax cuts to fund the pension system.
The reform is a personal challenge for Macron, who is looking to build his legacy as he cannot run for a third term in 2027 and has always been keen on leaving his mark on the French economy.
His approval rating has fallen to the lowest level since March 2020, before the Covid pandemic swept through France, according to a survey by pollster Ifop for Paris Match magazine and Sud Radio published on Tuesday.
(Updates with union comments starting in third paragraph. An earlier version of the story corrected day of union meeting)
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.
