Macron’s pension bomb – now the French should work almost as long as we do
The Franco-German relationship is not one that shines at the top level. French President Emmanuel Macron and German Chancellor Olaf Scholz are not a real dream team. The most recent low point is that Macron announced a day before Scholz what war equipment he wants to deliver to Ukraine – and thus duped the Germans all over the world. The much-vaunted Paris-Berlin axis is off track.
It is all the more astonishing that France has chosen Germany as its role model when it comes to pensions. Between Flensburg and Freilassing, the retirement age will be gradually increased to 67 by 2031. The 1964 vintage will be the first to be affected. In France, Macron has also been working on a pension reform for some time. This Tuesday, his Prime Minister Élisabeth Borne will present details. The most important point, however, is already clear in broad strokes.
Pension in France in future only at 64?
In the future, our neighbors should also be able to spend more time sitting at the screen, standing at the workbench, in short: they should be able to look forward to retirement longer. The current retirement age of 62 years is to be increased to 64 or 65 years. As it stands, it amounts to a standard working time up to 64 or 43 years of contributions for a deduction-free pension.
Only the over-65s supported the plans. According to surveys, the vast majority of the traditionally strike-friendly French are already preparing for demonstrations and protests. During Macron’s last attempt to reform pensions, hundreds of thousands took to the streets in winter 2019/20 and largely paralyzed the Grande Nation with strikes.
Macron wants the French to work longer
Macron is nevertheless convinced: “People in France have to work a little more.” And: “I hope that we can create a stronger France through our work and our commitment.” Otherwise, the welfare state and pension payments could not be maintained at the current level.
The government is basing this on calculations that the pension fund will run into deficits if the retirement age is not raised. Contrary to earlier horror forecasts, things are currently looking quite good for the French pension fund. According to official information, it will have a surplus of 900 million euros for 2022.
In addition, the French population is also aging, but less rapidly than in Germany and therefore more contributors pay into the system. The average age in France is 41.7 years, in Germany it is 47.8. The birth rate is also higher in France. The reform is expected to flush the state coffers with around 30 billion euros.
Pension reform in Germany either good or bad example
The liberal economist Jean-Marc Daniel, in an exchange of blows with his more left colleague Thomas Porcher on “Radio France”, nevertheless emphasizes that Germany has shown how it should work with its reform. For Porcher, on the other hand, Germany is a bad example that France should under no circumstances follow. In Germany, the grand coalition decided in 2007 to gradually increase the age to 67 – so that the pension fund does not drown.
“If Germany plunges into disaster, we don’t have to follow,” he clarifies. His argument is the risk of falling into the poverty trap as a pensioner, which is three times higher in Germany than in France.
Porcher warns that everyone who has to stop working at 62 for health or similar reasons will receive less pension in the future, as is the case in Germany. In the pension reform he sees a redistribution between those who work physically hard and those who have to do less physically. In other words, if you work sitting down, you can easily hold out longer than a construction worker, for example.
France affords expensive pension system
But the truth is that France’s pension system is very expensive. According to the OECD, our neighbor spends almost 14 percent of its economic output on pensions, in Germany it is 12 percent. And that, for example, employees of the energy supply companies or the Paris public transport company RATP could retire at the age of 52.
Monika Queisser, pensions expert at the OECD, makes it clear in the “Welt”: “It is certain that French pensioner households have a higher standard of living than in most other OECD countries.” The sober figures confirm this. According to this, the French receive 74 percent of their last net wage as a pension, in Germany it is almost 53 percent. When it comes to the actual retirement age, people in Germany work 14 months longer.
Schluss put manners?
Is Macron’s reform now putting an end to the beautiful life of pensioners? Will the much-cited savoir-vivre soon come to an end? Wait and see – what remains of the reform plans when expected demonstrations reach their peak. Almost 75 percent of the population rejects the pension reform.
In particular, Macron has already closed the unions against himself. “There hasn’t been such an announcement in the past twelve years,” said the head of the CGT trade union federation, Philippe Martinez, to l’Obs magazine. The boss of the largest union CFDT, Laurent Berger, called an increase in the retirement age a “red line”. In its current form, the reform will lead to social unrest, he told the newspaper Dépêche du Midi.
And the left-wing party La France Insoumise led by Jean-Luc Mélenchon is already mobilizing its own protest march for January 21. Just one day later, despite the recent irritation, Macron and Scholz want to celebrate 60 years of the Élysée Treaty and thus Franco-German friendship. Maybe they’ll talk about retirement when they get the chance. A topic that obviously does not only concern us.
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