"You can bring down several governments at once with the pension reform," said Prime Minister Michel Rocard in 1991 when he was presented with a white paper on this delicate project. Now Elisabeth Borne has the thankless task of reforming the French pension system – and is encountering strong opposition.
"Live like God in France"
Economics Minister Bruno Le Maire believes that when it comes to pensions, people really live like God in France. Because France has one of the most generous pension systems in the world. But there is a fundamental problem and it is the same as in Germany: "The system is based on the cohesion of the generations: between those who work and those who no longer work," says Le Maire. But as society ages, the financial balance of this system is threatened.
There are very different statements about how big the deficit that threatens the French pension funds really is. The scenarios differ depending on which unemployment rate or economic development is used. For the French government, the impending financial hole is nevertheless the crucial point that makes the reform necessary.
Government spokesman Olivier Veran says the numbers are unyielding. "If we don't reform the pension system, we will accumulate deficits every year. It starts at ten billion euros a year and then it will be 15.20 billion euros," said Veran.
According to official figures, pension entitlements cost the French state around 332 billion euros in 2020. This corresponds to around 14 percent of gross domestic product and 41 percent of all social spending.
Minister of Labor wants to abolish special rights
Every employee in France belongs to a special pension fund depending on the occupational group. There are 42 in total. Some special health insurance companies enable their insured persons to retire earlier.
Stop it, says Labor Minister Olivier Dussopt. He wants to abolish some of these "regimes speciaux". For example, for the employees of the Paris transport company or the state electricity and gas companies.
They want to put an end to relationships that could seem like privileges, says Dussopt: "Until now, no one has had that courage." The "regimes speciaux" are outdated because everyday work in these professions has changed. "But this must not be enforced against agreements that already exist. That is why the 'regimes speciaux' are only abolished for those who are newly hired."
Pension funds should be balanced by 2030
On the other hand, the government does not want to tighten the pension contributions. How much an employee pays into the pension fund depends on which fund he is insured with. To put it simply, an employee in the private sector, for example, pays 10.5 percent of their gross salary into the pension insurance system – the employer even pays a good 13 percent. In principle, the contributions are higher than in Germany and not divided equally. In addition to the contributions, other taxes flow into the pension system.
Saving the pay-as-you-go system with even higher contributions cannot be the solution, says Prime Minister Borne. Neither wage costs nor taxes will be increased, "because our goal is full employment":
Pension in France higher than the OECD average
From the government's point of view, the French have to work longer for this – and that is the central point of contention of the reform. Anyone who has reached the current retirement age of 62 and wants to retire without deductions must have paid contributions for 42 years. The reform is not only intended to gradually raise the retirement age to 64. In the future, the French will also have to pay contributions for 43 years in order to have full pension entitlements.
Those who have earned average income receive around three quarters of their previous net income as a pension – more than the OECD average. Sociologist Bruno Cautres believes that there is a reason why many French people are so vehemently opposed to the current reform: In the aging French society, there is a lack of a real debate about what working longer means. "Does that mean just being a contributor and ensuring the financial survival of the system? Or does that mean staying active longer to change jobs again; to improve your material situation; to develop new career prospects?" says Cautres . "All of that is missing."
The proportion of people between 55 and 64 who are still working is around 56 percent in France – in Germany it is almost 72 percent. Incidentally, a majority of people in France say that something fundamentally needs to change in the pension system. But the "how" could be hotly debated in the coming weeks.