On January 10th, Emmanuel Macron’s government will present the new French pension reform, which will test his resilience. The story of this reform has lasted since his first steps as President of France.
When first elected in 2017, Macron launched an ambitious pension reform he had announced during his campaign. The plan aimed to adopt a self-balancing pension system already implemented in European countries, such as Sweden and Italy (a nationally defined contribution scheme). This plan would cover all French retirees with the same rules for all. That would have been a revolution, as the present pension system is organized with a patchwork of more than 40 different schemes with very different rules.
It should have been a walk in the park, as Macron’s party possessed a large majority for the reform in the Parliament, along with employers, a majority of the political players, and the main trade union in favor of this new system. But it has been a political mess.
Macron has chosen the wrong team to lead the effort and let the discussions go on for months and years without demonstrating any flexibility during the talks. Then, when at last, he decided to push through, COVID-19 arrived, and he had to postpone the decision until his second mandate.
During the campaign for the second round of 2022, Macron defended a more classic reform, focusing on raising the legal retirement age to 65 (from 62 today), which he had pledged not to do five years earlier. According to the government, the pension scheme is not financially balanced even if the system generated a surplus in 2021 (900 million euros) and in 2022 (3.2 billion euros) due to higher mortality among seniors with the Covid-19 epidemic and the resumption of growth. But the following years look grim, with a deficit expected to reach 7.5 and 10 billion euros in 2027, then between 12.5 billion and 20 billion in 2032, when the total expenditure of the pension system amounted to 346 billion euros in 2021.
Macron’s opponents, including all trade unions, and nearly all his political opponents, criticize the reform and are united for once. The political left and the trade unions remind Macron that in 2021, only 55.9% of 55–64-year-olds were employed, compared to 60.5% on average in the European Union. Moreover, only 55% of those who retired in 2019 had worked during the previous year. For them, the priority is to increase the employment rate among people over 60 before raising the legal retirement age.
The polls support this position, with 54% of French people opposed to this reform and 44% in favor. It means the chances are high that hundreds of thousands of French people may take the streets against the reform, Macron, and his government and participate in strikes with dire consequences for the French economy.
Politically, it means that Macron may be quite in a bind when the reform is discussed in the Parliament. The parties that support him in the Parliament cannot give him a majority. Marine Le Pen’s populists are against the reform, considering it to be antisocial and unjust. The left refuses any increase in the legal retirement age. The conservatives (Les Républicains) should be able to partly support Macron, but the conditions that they will want to impose will bring still more people to protest in the streets.
The French President faces the first serious test of his second mandate. He is expected to step back and push for the reform. Macron’s Prime Minister, Elizabeth Borne, who comes from the left, may be able to negotiate a last-minute agreement with the biggest trade union (CFDT, French Democratic Confederation of Labour) and with the moderate wing of the political left in order to avoid most of the strikes and demonstrations. Macron may also get the agreement of the conservatives, but then he will have to face disruptive demonstrations, which could threaten his presidency. Or he will fail and be obliged to call for new elections, with the risk of losing them and giving a victory to the left or the populists.
