France: raising retirement age by vote 2023

The new pension reform of 2023 was adopted on March 17th. But according to a survey conducted at the beginning of March only 36 percent of French respondents had accepted the raise of legal retirement age from 62 to 64.

Weaknesses of the pension system

When talking about pension schemes, it is common to distinguish between two systems: the distribution system and the capitalization system. The distribution system is based on the principle of solidarity between generations: working people pay monthly contributions to the pension funds, which redistribute them to current retirees. The capitalization system, on the other hand, requires working people to save throughout their working lives, thus accumulating a sort of rent (a capital) that they will draw on once they have retired. While in practice many countries combine the two methods, France is the exception with its system set up in 1945, based solely on distribution. Although it is presented as a stable system, unique in the world, it has a weakness: it depends on demographics and a balanced ratio between the number of active contributors and the number of retirees so that enough people can finance the pensions of older people.
Yet, population aging, longer life expectancy, and the growing share of seniors in the French demographic imply that people spend more time in retirement today than they did a few decades ago. This system is therefore tending to run out of steam, which makes the question of its financing a key issue. Hence the desire of the public authorities to seek solutions to ensure its sustainability and the reform proposals.

Raising legal retirement age, an ineffective measure?

If the COVID 19 pandemic had made Emmanuel Macron renounce his project of universal pension - then considered unfair by Solidaires Finances Publiques (1st union of the French Public Finance Department) - the government would not abandoned the idea of a reform, which made the preservation of the social model depend. This time, the goal is financial: pension expenses represented 13.4 percent of the gross domestic product in 2023, and are increasing, and the current government persists in wanting to reduce the share of wealth devoted to these expenses.
However, although the postponement of the legal retirement age is presented as a necessary measure by the government, Solidaires Finances Publiques estimated, in its fiscal and social report of the five-year term, that "in a context of mass unemployment, raising the retirement age is an economic aberration that only shifts the question of financing inactivity to other social benefits (unemployment, disability, minimum income)".
According to the Cour des Comptes (France's supreme audit institution), the increase in the legal retirement age from 60 to 62 in 2017 generated approximately three billion euros in additional expenses. Raising the legal retirement age without addressing the issue of unemployment, and in particular that of seniors, and without measures to improve working conditions would thus be a dead end according to unions.
Presenting pension reform as the only way to preserve the French social model has an advantage for the presidential majority. This assertion makes it possible to disqualify anyone who would protest against the reform, which many consider to be anti-social and which would lead to a significant loss of income for part of the population.
By making the pension reform the only way to preserve a unique system in the world, the government, through its rhetoric, presents the opponents as the destroyers of the French social system, which it could perpetuate by making other budgetary choices, such as the fight against tax evasion, which costs France several billions of euros each year, the implementation of a tax on super-profits, or the re-establishment of the wealth tax.