Support for raising legal retirement age in France 2022, by political proximity
On October 5, 2022, Olivier Dussopt, the Minister of Labor in charge of the pension reform (which the government wishes to implement by summer 2023), gathered the social partners in order to set up a schedule of thematic consultations. Among the measures discussed, the abolition of special schemes (such as the one applying to RATP employees), the introduction of a long career scheme for people who started working before the age of 20, the establishment of a minimum retirement pension of 1,100 euros for full careers, and the raising of the legal retirement age. Indeed, the government wants to extend the age of retirement to 65, compared to 62 today. In order to do so, it plans to gradually raise the age by four months per year, in order to reach 64 in 2027, then 65 in 2031.
When asked about this at the end of September 2022, most French people were opposed to this last measure: only 37 percent of them were in favor of raising the legal age to 64, and only 22 percent in favor of raising it to 65. The most open to this change were, unsurprisingly, those who voted for the leader of the party that initiated the reform in 2022, but they were far from unanimous on this issue. Indeed, only 56 percent of Emmanuel Macron's voters were in favor of extending the retirement age to 65.
Yet, the number of retirees is increasing faster than the number of contributors. In addition, 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 proposals for reform.
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 tax on wealth.
When asked about this at the end of September 2022, most French people were opposed to this last measure: only 37 percent of them were in favor of raising the legal age to 64, and only 22 percent in favor of raising it to 65. The most open to this change were, unsurprisingly, those who voted for the leader of the party that initiated the reform in 2022, but they were far from unanimous on this issue. Indeed, only 56 percent of Emmanuel Macron's voters were in favor of extending the retirement age to 65.
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) which 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 are able to finance the pensions of older people.Yet, the number of retirees is increasing faster than the number of contributors. In addition, 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 proposals for reform.
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 has not abandoned the idea of a reform, on which it makes the preservation of the social model depend. This time, the goal is financial: pension expenses represented 13.8 percent of the gross domestic product in 2021, 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 tax on wealth.
