France’s pension reform: the bitter pill

The popular rejection of Nicolas Sarkozy’s abrupt changes to France’s pension system is rooted in the institutional and ethical flaws that underlie the reform, says Patrice de Beer.
Patrice de Beer
27 October 2010

The intense political struggle in France over reform of its pension system moved into a new phase on 26-27 October 2010 when the senate (the upper house of the French parliament) passed (by 177-151 votes) the controversial bill initiated by President Nicolas Sarkozy to raise the legal minimum retirement age from 60 to 62 and the qualifying age for a full pension from 65 to 67; followed the next day by the approval of the national assembly (by 338-233 votes). Now it enters the last stages of ratification before becoming law - probably in the second week of November.

A legal victory has (almost) been won. But the wider political battle over the future of pensions, and France’s social-welfare model more generally, will assuredly continue - often against the backdrop of the kind of nationwide demonstrations and strikes that have marked this “hot autumn”. So before assessing the details and politics of the reform it is worth looking more closely at this latest upsurge in France, which has generated so much attention (often rather tendentious) in international media.

France’s experience of protest over the last two centuries, and the elements of theatricality that have grown up around it, make the country appear the European champion in this sport at least - either the example to follow (as for some envious observers abroad) or to be avoided. In fact, the evidence is less than conclusive: for example, far smaller numbers took to the streets in France to protest against the looming Iraq war in 2002-03 than in other large European states. Yet the regularity of protest and the distinctive style of street demonstrations here, more even than numbers, have established France’s global reputation in this area.

Many of the reports and analyses of the current protest-wave (in France and elsewhere) focus on the limitations of those involved: the conservatism or even laziness of French workers who seek to cling to outdated privileges, their refusal to see that the world has changed and to adjust (as other European workforces have) to new demographic and global realities, the naivete of students campaigning to protect an expensive welfare system that will be paid for out of their future taxes (if they are lucky enough to get jobs...). But this approach tends to operate by recycling some familiar images of France (which the French themselves may partly be responsible for), itself a rather lazy approach; and perhaps too to reflect a certain intellectual conformism in the media. The result is that it misses other salient aspects of the protests.

The process and the policy

The most striking is that what characterises France - even more than demonstrations - is the country’s lack of social dialogue. In other European countries (such as Sweden), pension reform has been accomplished via a long process of discussion between social partners. French employers and trade unions may have for years negotiated over this crucial issue, including the compensation of earlier retirement for workers in especially tough jobs; but to no avail as employers have refused to budge. Now, reform has been imposed from the Elysée palace, then forced through parliament by emergency procedures. This process involved the government asking French unions and political parties to offer proposals, but without any hint of what it intended, and then refusing to listen. No wonder that two-thirds of French people oppose both some of the reform’s main points and the way it was conducted.

In short: no real negotiation, no give-and-take as happens in a normal democracy. In France, a policy which affects the lives of millions and is supposed to last decades is drafted over a short period in government offices; incorporates only a few marginal changes during the parliamentary debates; and is then presented to the people as a fait accompli.

The aims of the now deeply unpopular Nicolas Sarkozy in adopting this route include propitiating the rating agencies worried by France's growing public debt and deficit, and using a show of strong leadership to restore lost support on the political right and thus strengthen his position in advance of the next presidential election in 2012. If along the way a few more enemies are made on the left - this after all is the man who in July 2008 said “when there is a strike in France, no one notices it” - so be it.

The result is a mess. France’s fragmented and divided trade-union movement has united for the first time in years to call a series of strikes which have been supported by crowds on a scale not seen since May 1968: between 1 million and 3 million each time (the difference between the police and the unions’ estimate), including in smaller cities usually untouched by demonstrations. This degree of popular support - which registers in opinion-polls at around 69% - has remained high in the face of disruption to transport services and a petrol shortage. The figures can only mean that it includes conservative voters as well as the left.

The protests by young people, including university students, is another notable feature of the current events. French governments' greatest fear, after all, is to see its youth taking to the streets. But how, many ask with surprise on seeing youngsters’ enthusiastic participation in the demonstrations, can they be interested in what might happen to them in forty or fifty years’ time? Well, if they can be jailed at 13, they can surely have an opinion on national issues, especially at a time when their generation is the first in more than a century that is expected to to fare worse than the one above. Moreover, to see parents, siblings, friends, or neighbours out of job - as many of these kids will have - is a bitter awakening to adult life.

The unfairness principle

There is a broader reason why the French resent the way this reform has been implemented - even if they have all but accepted the principle that changes to their pensions system are unavoidable. Above all, people resent its unfairness. Even in Britain, the first budget of the new coalition government - for which “fairness” is a mantra - attempts to share the burden between all social classes. Nicolas Sarkozy's reform is in three ways probably the toughest, the fastest and the least fair of all.

First, it imposes the heaviest part of the cost on labour, whereas the affluent and the business class are touched only marginally touched (thus confirming the image of Sarkozy as “the president of the rich” or of the “CAC40”, the most profitable companies listed on the Paris bourse). Even token measures such as a reduction in the vast salaries of government members, top civil servants or parliamentarians have been rejected.

Second, the number of years needed in France to qualify for a full pension is forty-one (and moving towards forty-two), whereas in most European countries it is around 35 (even where they have raised the retirement age to 65 or more). Moreover, France has the worst unemployment rate for both under-30s (23%) and over-60s (about 60%) in the European Union, meaning that waiting until 67 to get a full pension equates not to working longer but to being on the dole longer (and thus getting a lower pension...). It is only natural that people who have worked most of their lives want to retire while still in good health, but many would accept working for a few more years if that involved real work and real wages rather than queuing in unemployment offices.

Third, French employers have long tended not to hire young people without experience, or else do so only as trainees with little or no pay - and to retrench workers in their 50s in their positions (a situation that has persisted for years, thanks to state subsidies and union support). In addition, many women who worked part-time for many years then leave to bring up their children end up with pensions close to income-support levels. Nothing in the reforms addresses these issues.

The political lesson

The philosopher Robert Redeker identifies a social-cultural element in France’s discontent over the pension reform: “Retirement is the great social promise which maintains the cohesion of the collective structure. It weaves a series of acceptances out of the promise it makes, thus preventing a large part of the social body from sinking into revolt and violence”. France, he adds, is a country which “lives its retirement as a hope” for a better life, while forgetting it is also the antechamber of death. No surprise then that a reform which represents “the agony of a French myth” was so unwelcome (see Robert Redeker, "La retraite, agonie d'un mythe francaise", Le Monde, 21 October 2010).

An editorial in the same newspaper notes that one of the late parliamentary amendments incorporated in the effort to soothe the bitter medicine is a promise to open negotiations in 2013 on a new pension scheme based on the Swedish points-system. This shows that Nicolas Sarkozy’s project is not as crucial as proclaimed, since it might be made obsolete within three years - and that a national discussion should have been held about the different options available before rather than after the vote. So much fuss and posturing for so little! A classic, then, of the Sarko style - with the French and with the rest of the world alike.

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