French workers strike to keep their lavish pensions

AFTER MONTHS of talks, endless delays and a week of disruptive strikes, the French government finally unveiled on December 11th its long-promised pension reform. The good news is that it has decided to press ahead with its plans, including the abolition of regimes with special privileges, despite the biggest show of union force on the streets since President Emmanuel Macron took office in May 2017. The bad news is that the new system will push the full burden of the changes on to France’s younger generations.

In a speech that leaned studiously to the left, Edouard Philippe, the centre-right prime minister, described the new universal points-based system as a “fairer” system that will guarantee “social justice”. It will replace the current sprawl of 42 regimes, most of which have different rules. For those beginning their working life, the new rules will apply from 2022, and from 2025 for those already in work but currently under the age of 45. Older generations will keep the existing rules. Sliding transition rules will bring the new system fully into effect by 2037.

Under the new system the special regimes, which today allow train drivers to retire at the age of 50, will be abolished. Pensions for public-sector workers will be calculated according to the same (less favourable) rules as those in the private sector. The new points-based system will allow those with patchy careers, including many women, to accumulate credit for every hour worked. A minimum monthly pension of €1,000 ($1,100) will be brought in from 2022, to help farmers and others currently surviving on less. High earners will pay extra contributions for the pensions of others. And, although the minimum legal retirement age will remain 62, a new “equilibrium age” of 64 will build in incentives to work beyond that. Medef, the bosses’ federation, described the package as a “good balance”.

Will this moderate approach help to calm the streets? Mr Philippe made it clear that he will not shelve the project altogether, as the unions want. Since December 5th SNCF, the national railway, as well as regional trains, the Paris metro and airport ground staff, have been on a rolling strike that looks likely to continue. Teachers are staging walkouts every few days. The unions know full well that past French governments have backed down in the face of paralysing strikes. Alain Juppé, prime minister in 1995, famously insisted that he would hold firm in the face of industrial action, only to cave in and shelve his own pension reform a few weeks later.

Mr Macron is keen to prove that he is different. He has long argued that France needs to be “transformed” rather than merely “reformed”. This is why he promised during his election campaign in 2017 not to raise the retirement age but to redesign the entire system. At stake therefore is not just France’s ability to create a fairer and more flexible pension regime, but also Mr Macron’s reputation as a reformer who does what he promises.

This week, the hard-line unions dug in and vowed to stay on strike. Even the Confédération Française Démocratique du Travail, a more moderate union which supports a points-based system, is now furious because of the “equilibrium age”. If he is to get his reform through, the unpopular Mr Macron will have to rely on public opinion. For now a majority of the French continue to support the strikers, just as they did in 1995. The longer the disruption goes on, however, the more this support could ebb. On day one, a massive 800,000 people, according to official figures, took to the streets countrywide. By December 10th only 339,000 turned out. The share of teachers on strike dropped to 16% from 47%. By mid-week only 16% of all SNCF workers had downed tools, down from 56% on the first day. Most metro lines in Paris and most fast trains across the country, though, continue to be shut down. The strike could last a while yet.

A year after the gilets jaunes (yellow jackets) protests, France remains restless and suspicious. To this has now been added a further division, between the generations. “The baby-boomer generation benefits from the current system, and wants to avoid any pension reform at all costs,” says Maxime Sbaihi of Génération Libre, a liberal think-tank. Those who have already gained the most from France’s generous welfare state look set to keep their rights to enjoy one of the world’s most generous pension systems. ■