Retirement, Again
Emmanuel Macron, as everyone knows by now, is determined to pass a retirement bill. During his first term, the Gilets jaunes movement delayed it for about a year, from late 2018 to late 2019; and when he returned to the issue (accompanied by the usual panoply of railway strikes and demonstrations) the pandemic struck. To Macron’s credit, he promised during the presidential campaign that he would carry out this reform (instead of lying about it), and now he is trying it again. He (and before him, President François Hollande) made a series of disruptive changes, in the name of taking the red tape out of the French labor regulations. Retirement reform is different; it is a “third rail” of the Fifth Republic.
In his first pass at the subject in his first term, Macron’s rollout of the plan focused on the numerous different systems of retirement reform and their pools of money, many of which had to be bailed out by the government; and on the new “point” system of retirement, by which everyone would get points for time worked, for pénibilité, (the difficulty of the work), and so on.
(See, on this blog, https://jharsin.colgate.domains/blog/news/macrons-pension-reform-more-interesting-than-it-sounds/; and https://jharsin.colgate.domains/blog/news/pension-reform-again/) This idea was structured on the premise that workers will be changing jobs multiple times in the course of their lifetimes, and that a pension based on one particular trade will not help them much. The “points” are to be calculated on the basis of the actual time worked, whatever the job, including additional aspects (most notably pénibilité) in the calculation.
This time his government is on ground that will be more familiar to other western governments, including the United States, by focusing on the solvency of the system. The proposal is to move the retirement age, at full compensation, from 62 to 64. (For many countries, 64 would be an improvement.) Nevertheless, since France, like many countries, has a system by which younger workers pay withholding taxes that feeds into a fund for retired workers, and are themselves then supported by the next generation, the measure has been framed around demographic change. In the United States, these payments are derisively referred to (by the right) as “entitlements,” as in the constantly invoked need for “entitlement reform.”
The numbers cited in France: in 1970, there were 4 workers for every retiree; currently, the number is only 1.7 workers. [1] It is a ratio that is often repeated in this new attempt at retirement legislation. It is inarguably true. Whether the system is sustainable in some other way is a question that seldom gets asked, and retirement reform is framed as the responsible and serious thing to do, softened with the good news that people actually live longer now, so (apparently) shouldn’t mind working longer.
Macron might have been able to pass this reform in the previous National Assembly, where he had a strong majority, but now he has only a relative majority, and his government, led by Prime Minister Elisabeth Borne, needs an ally. Neither the Left (the Nupes alliance) nor the Far Right (Le Pen’s party) are possible as a body. That leaves his government scrambling to get the 61 members of Les Républicains to join with them.
The reform was introduced to the National Assembly on January 23, 2023, and the debate began on Monday, February 6, 2023. Throughout early January, Borne had been negotiating with Éric Ciotti, deputy and recently elected leader of Les Républicains, and on the Sunday before the debate began, she gave an interview to Le Journal du Dimanche announcing that the government had “moved” on two issues of importance: the Senior Index; and the 43-year employment limit before full retirement payment. [2]
The Senior Index refers to the employment rate of people in the 55-62/4 age group, which is below that of the rest of Europe. The Senior Index would require employers to employ and to seek to fill jobs with older workers. This new provision would require companies with at least 300 people to file an official report every year relative to older workers. MEDEF, the employers’ Union, is against it; the workers’ unions say it is insufficient; she promised that her government would “take up” the issue of extending the measure to companies employing at least 50 workers and up, and would even consider financial sanctions.[3]
(In this provision, Borne is once again reinforcing the harmful practice of different regimes for differently-sized industries, a practice blamed for preventing companies from hiring. As in: if you were an employer with 49 employees, and realized that going to 50 would bring about a whole new regime of compliance and reporting, would you hire that 50th employee?)
In regard to Ciotti and his republicans, they had placed their emphasis on the notion of length of cotisation, or withholding taxes, as the measure of time before retirement. They had fixed the number of years contributing to pension funds to 43, thus allowing those who had started to work early in their lives (without going to universities) to retire early.
Borne was ready to compromise, for those who had begun to work between the ages of 20-21, and who could thus retire at 63. “You see,” she continued, “we hear their request. This is a measure that will cost between 600 million to a billion euros per year, and which will concern up to 30,000 persons per year.” She believed that the LRs, who had always supported raising the age of retirement (their presidential candidate, Valérie Pécresse, had even suggested the age of 65) would support this bill. [4]
And that support would get them over the top, without resorting to article 49-3 of the constitution. (49-3 allows the government to declare the bill passed, giving opponents the chance to bring a motion of censure, which if passed would force the government to resign.) She is, however, resorting to Article 47-1, which limits, though not unduly, the time given to the debate of social security bills.[5]
And the demonstrations continue, both inside and outside the Parliament.
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Images from Shutterstock.
[1]David Revault d’Allonnes, “Éric Ciotti, président des Républicains: ‘La situation économique impose cette réforme des retraites,'” Le Journal du Dimanche, January 7, 2023. https://www.lejdd.fr/Politique/ericciotti-president-des-republicains-la-situation-economique-impose-cette-reforme-des-retraites-4159493
[2]
Stéphane Albouy, Juliette Droz, Emmanuelle Souffi, David Revault d’Allonnes, “Elisabeth Borne au JDD: “nous allons bouger’ sur la réforme des retraites,” Le journal du Dimanche, February 4, 2023.
[3] Ibid.
[4] Ibid.
[5] Article 49, 3rd paragraph:
Article 49
The Prime Minister, after deliberation by the Council of Ministers, may make the Government’s programme or possibly a general policy statement an issue of a vote of confidence before the National Assembly.
The National Assembly may call the Government to account by passing a resolution of no-confidence. Such a resolution shall not be admissible unless it is signed by at least one tenth of the members of the National Assembly. Voting may not take place within forty-eight hours after the resolution has been tabled. Solely votes cast in favour of the no-confidence resolution shall be counted and the latter shall not be passed unless it secures a majority of the Members of the House. Except as provided for in the following paragraph, no Member shall sign more than three resolutions of no-confidence during a single ordinary session and no more than one during a single extraordinary session.
The Prime Minister may, after deliberation by the Council of Ministers, make the passing of a Finance Bill or Social Security Financing Bill an issue of a vote of confidence before the National Assembly. In that event, the Bill shall be considered passed unless a resolution of no-confidence, tabled within the subsequent twenty-four hours, is carried as provided for in the foregoing paragraph. In addition, the Prime Minister may use the said procedure for one other Government or Private Members’ Bill per session.
The Prime Minister may ask the Senate to approve a statement of general policy.
Article 47-1
Parliament shall pass Social Security Financing Bills in the manner provided by an Institutional Act.
Should the National Assembly fail to reach a decision on first reading within twenty days of the tabling of a Bill, the Government shall refer the Bill to the Senate, which shall make its decision known within fifteen days. The procedure set out in article 45 shall then apply.
Should Parliament fail to reach a decision within fifty days, the provisions of the Bill may be implemented by Ordinance.
The time limits set by this article shall be suspended when Parliament is not in session and, as regards each House, during the weeks when it has decided not to sit in accordance with the second paragraph of article 28.
Both from the French Fifth Republic Constitution in English, https://www.elysee.fr/en/french-presidency/constitution-of-4-october-1958
