France Pension Reform
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On January 19th, 2023, a massive strike brought France to a standstill. Protests took place in major French cities, including Paris, Marseille, Toulouse, Nantes and Nice, completely halting transport services, schools, airports and refineries. Even the Eiffel Tower was closed to visitors. The Interior Ministry claimed that more than a million people participated in the demonstrations, with eight of the biggest unions organizing walk outs. 80, 000 people marched in Paris, where riot police were deployed and released tear gas to deal with thrown bottles and fireworks. The reason for these demonstrations is the new pension reforms proposed by Macron’s administration, wanting to raise the age of retirement from 62 to 64 years old.
France has a strong history of strikes as a way for the population to exert pressure on their government. It has had a rail strike every year for 72 years since 1947. According to the state-owned SNCF railway company, figures from the labour ministry show that from 2005 to 2017, 118 work days were lost to strike action per 1,000 private sector workers on average per year. The International Labour Organization ranked France second for days not worked due to strikes and lockouts per 1000 workers.
The French people recognize that their country was built on revolution and protests, and they do not hesitate to use this power to this day. The first major protest exploded in spring 1968. The May revolt, as it became known, was led by students and grew to mobilize 9 million workers, paralyzing the country for 3 weeks. In 1995, another set of protests and strikes rocked the country against the Juppe plan on pension and social security reform. Even with the Prime Minister Alain Juppe defending the reforms as necessary, the protests successfully pressured the federal government to abandon the reforms. Again in 2006, students and trade unions fought against a new employment contract meant to allow employers to fire workers under 26 more easily. The forceful demonstrations managed to cow the government into archiving the proposal. A familiar contentious point appeared in 2010, on the topic of pensions. Back in 2010, Prime Minister François Filion’s government wanted to raise the age of retirement from 60 to 62. Despite millions of workers taking to the streets, the administration held firm and passed the law. This reform planted the seeds for the new waves of protests that have engulfed the country in 2023.
The French pension reform has a unique set of rules and contribution system. There is a specific formula used to calculate the amount a person is entitled to after retiring. This formula takes three factors into account: a person’s Average Yearly Income (RAM), taken from their 25 best working years, a payment rate, and total length of insurance, including periods credited as periods of insurance, which is the amount of time they have contributed to the national pension plan. To qualify for a full pension, workers in France must contribute for 166 to 172 quarters, or approximately until they reach the age of 62, before they can retire. Under this setup, the government provides 50% of the retiree’s income during their 25 highest earning years. The system works on the basis of contributions from workers to the pension plan, and also financial input from the state. The government claims French citizens now live longer, and therefore need to work longer to keep the pension system financially sustainable. The Macron administration determined the only viable solution is to raise the retirement age from 62 to 64, so people contribute to the state pension fund for a longer period of time.
This reform has been met with enormous backlash from the French population. This explosive response to Macron’s proposed reforms comes at a time when French citizens are already struggling. Covid-19 led to a massive rise in inflation and cost of living. Due to the war in Ukraine and Russia no longer supplying Europe with gas, electricity has been scarce, and the government has imposed mandatory blackouts throughout the country. CFE-CGC union chief François Hommeril explains, “This reform falls at a moment where there is lots of anger, lots of frustration, lots of fatigue. It’s coming at the worst moment, in fact”. All this anger and tension has boiled over in nationwide protests, with at least another protest planned for January 31st, 2023.
With such a tense situation, there is no clear outcome in sight. The upcoming demonstrations will surely put even more pressure on the government by shutting down public services, workplaces and schools for the second time in a month. History shows us that this reform will either be enacted by Macron without the support of the people or popular demonstrations will once again succeed in influencing public policy. Macron must also take into account his own position in parliament. His party lost absolute majority in Parliament, and he faces difficult opposition from both the left and the right as he struggles to form a coalition government. Passing this reform might be the final blow to his image. However, under such strenuous circumstances due to the pandemic and the war in Ukraine, have stretched France’s budget to an unprecedented extent. New unpopular measures may be necessary in the near future.
All in all, this state of affairs is far from over and the outcome of the standstill remains to be seen. But unless the Macron government can make his proposal more palatable for the population, the French will use their right to strike with the same fervour and passion as they have for generations.