Macron’s Pension Reforms Are Eminently Reasonable

The current system is a mess. Changes would be phased in over twenty years.

Paolo Gentiloni Emmanuel Macron
Italian prime minister Paolo Gentiloni is received by French president Emmanuel Macron in the Elysée Palace in Paris, September 27, 2017 (Elysée)

Having liberalized labor law to make it easier for companies to hire, reined in labor migration from Eastern Europe to protect low-skilled workers in France and shaken up intercity bus service and the state-owned railway company, President Emmanuel Macron — just fighting his way back from the reactionary Yellow Vests protests — is taking on a reform of France’s sprawling pension system.

You can’t accuse the man of not trying.

French reaction

The reaction has been predictably French. Metro lines shut down in Paris last month, when public transport workers went on strike. Trade unions have called another strike, this time of railway workers, in a few weeks. Polls suggest up to two-thirds of voters are unhappy with Macron’s proposals.

The last president who made a serious attempt at rationalizing the convoluted French pension system was Jacques Chirac in 1995. He gave up in the face of mass protests and lost a parliamentary election eighteen months later.

Nicolas Sarkozy raised the official retirement age from 60 to 62 but balked at making further changes.

Yet there are many arguments for reform.

Arguments for reform

  • French average life expectancy at birth is 82.3 years, 85.4 for women and 79.5 for men. Although the official retirement age is 62, men on average retire at 60 while women who interrupted their careers to raise children often have to work until they’re 67. Many public sector workers get a sweetheart deal. Railway drivers can retire at 50, policemen at 52 and metro workers at 55.
  • International observers agree France’s generous, and balkanized, retirement system is one of the reasons it works less than any other industrialized nation: 630 hours per year per capita, according to the OECD, compared with 722 hours in Germany and 747 in the United Kingdom.
  • France has 42 different public pension schemes, ten for the state railway company alone. Macron would merge them into a single, points-based system, which would make it easier to switch jobs and take a few years off to parent.
  • Some funds, like those of metro workers, are chronically loss-making (no wonder!) while others, like those for lawyers and nurses, are in the black. They fear losing out, but they currently subsidize loss-making funds anyway through their taxes.
  • Those who are low-paid early in their careers, like teachers, fear losing out if pensions are decided by points accrued over a lifetime rather than a percentage of their salary at retirement, now 61 percent on average. However, they will also be making lower monthly pension payments during their working life.
  • Reforms will not apply to anyone already in retirement and all rights acquired up to 2025 will be preserved. Even after that, there will be a fifteen-year transition to the new system. So almost nobody protesting right now will experience any change.