France Debates Pension Reforms and Goes on Strike

A protester uses a flare during a demonstration in Lyon, central France, on Tuesday. (AP Photo/Laurent Cipriani)

(CN) – Seeking to calm nationwide strikes that threaten to cause havoc during the winter holidays, French President Emmanuel Macron on Wednesday signaled a willingness to make a key concession in his plans to overhaul France’s retirement system.

Macron is pushing to overhaul France’s complicated public retirement structure, which is made up of 42 different pension schemes. He says plans for a universal retirement system will make France’s pensions more fair and solvent. To pay for the changes, his proposal calls for raising the age of retirement from 62 to 64 starting in 2027– and that has sparked widespread outrage.

The mass strikes have led to power cuts in the cities of Lyon and Bordeaux, the blocking of oil refineries and ports, paralysis on railways and Paris’ metro system, and hundreds of thousands of people taking to the streets to denounce the government and Macron.

A recent Harris Interactive poll showed 62% of French people support the strikes, though most don’t want the holiday season to be interrupted by strikes halting trains, buses and airplanes.

On Wednesday, though, Macron’s office said in a statement that the president was open to reevaluating the idea of raising the retirement age to 64, leading many to believe he was ready to scrap that part of the reform.

His government’s plans sparked nationwide protests on Dec. 5 and they have continued since, making Wednesday the 14th day of strikes. Among the strikers are railway staff, teachers, lawyers, police officers, port workers and even opera singers.

France’s powerful trade unions are threatening to continue the strikes through the holidays with the aim of causing widespread disruption and forcing the government to back down.

Government officials and trade union leaders met on Wednesday to discuss their differences. More meetings were expected to take place Thursday. So far, Macron has stayed above the fray and left Prime Minister Édouard Philippe to handle the negotiations and rocky political moment.

Dropping the proposition to make full retirement begin at 64 may be enough to persuade France’s largest and more moderate union, the French Democratic Confederation of Labour, to call off the strike. The union is known in France by its initials, the CFDT. It is in favor of unifying France’s various pension regimes under a single points-based system.

“Why not? Maybe [the government is ready for] a compromise,” said Remi Aufrere-Privel, a CFDT leader with a railway workers union, on France 24 television.

But, he added, his union must hear the prime minister “say it was only an idea” and scrap plans to raise the retirement age to 64.

Yet even if the CFDT is willing to go back to work, Aufrere-Privel doubted other unions, particularly the hardline left-wing General Confederation of Labor, or CGT, will be persuaded to call off the strike. The CGT is calling for the entire retirement overhaul to be withdrawn.

After Wednesday meetings, the CGT’s leader, Philippe Martinez, said there had been no breakthrough in talks.

Antonio Barroso, the deputy director of research at the London-based political risk firm Teneo Intelligence, said winning over the CFDT was pivotal for the government.

In a briefing note, he said Philippe will likely continue negotiating with CFDT “while betting that the disruption created by the continued protests will turn public opinion against the more hard-line demonstrators.” He said the government’s strategy is to divide the unions and win the debate.

Barroso said the CFDT is a “strong defender of a points-based pension system in order to adapt the French economy to the reality of more flexible careers.”

Even if the CFDT doesn’t back down, Barroso said “the government seems willing to endure the ongoing strikes for now, as it probably believes that the longer the trade unions create disruption, the more likely public opinion is to turn against the protests.”

Macron wants to see legislation moving through France’s parliament by February and his overhaul become law by the summer.

The president is viewed as pushing ahead with this overhaul, despite its unpopularity, because he wants to prove that he can keep his word on election promises.

“He’s saying, ‘Hey, this is what I promised, this is what I will do,” Hélène Blake-Valognes, a French economist who has studied the pension system, said in a telephone interview with Courthouse News on Wednesday.

“It’s definitely a challenge he wanted to face,” she said about pension reform. “I’m not sure why he started it. Maybe to show he can reform; he was elected on this basis.”

In truth, though, she said French voters did not choose Macron because of his ambitious package of reforms but rather because so many French did not want to see his challenger, far-right politician Marine Le Pen, win the presidency.

Economists say overhauling France’s pension system is not urgent because previous changes to it – most notably raising the retirement age from 60 to 62 – have reined in costs.

Currently, those employed in the private sector pay into a single system while workers in the public sector have their own retirement systems. For instance, railway workers and those employed by the metro system in Paris have separate systems that allow them to retire in their 50s. Some public workers also get much higher pensions than others in the private sector.

Macron is proposing that everyone pay into a single system similar to Social Security. Private pension plans are very rare in France, where a large slice of workers’ wages go toward paying for public pensions.

“The pension system is not so bad in France so you don’t have to pay for a private pension,” Blake-Valognes said. She said people use extra money they save for other purposes, such as buying real estate.

Economists say there will be winners and losers in moving to a single system. Those in the public sector, such as railway workers and teachers, are expected to be the losers but others, especially those working seasonal or temporary jobs, would benefit.

“The basis of the reform is to have a simpler and fairer system,” said Mireille Clapot, a parliament member with Macron’s political party, the Republic on the Move, on France 24 television.

The changes envision determining a person’s pension based on a points system. But the value of the points would be determined by the government, and trade unions fear the government might lower the value of the points in the future.

“Putting up a points system means you trust the government with these points,” Blake-Valognes said.

She said the backlash against the pension overhaul isn’t about an unwillingness on the part of French citizens to change but rather a reflection of their distrust in government.

“People are not afraid of modernity,” she said. “But they don’t trust the government.”

(Courthouse News reporter Cain Burdeau is based in the European Union.)

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