Pension reform in France: Change and public reaction:

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The complex French pension system

France’s pension system has long been a topic of national interest and operates on a pay-as-you-go basis, deeply embedded in the country’s social fabric. The system is primarily organised at national level and has been both praised for its solidarity and criticised for its economic challenges.

The system before the reform

France has 42 basic pension schemes in the public sector, with each sector defending its current position. Civil servants and employees of large public enterprises are protective of their entitlements, and their trade unions are prepared to bring the country to a standstill to preserve these favourable rights. Most schemes were introduced after the Second World War, with a retirement age of 65; at the time, remaining life expectancy at age 65 was less than 10 years. The retirement age was lowered to 60 in 1983 under François Mitterand. Since 1993, numerous reforms have been introduced to counteract the potentially adverse effects of a lower retirement age, rising life expectancy and large cohorts of employees leaving the labour market. These include the Fillon Act of 2003, the Woerth Act of 2010 and the Touraine Act of 2014.

President Macron’s comprehensive proposal in 2021 was for a universal pension system aimed at unifying all French pension schemes. However, this proposal was abandoned due to the Covid-19 pandemic and a lack of parliamentary support following the 2022 elections. The current pension system faces challenges such as rising life expectancy, a low birth rate and a labour market that struggles to employ older workers. Without a substantial funded component, pension costs have risen sharply and account for a significant share of the government budget. In 2018, France spent 14.4% of its GDP on public pensions, more than on defence and almost three times as much as on education.

The proposed reform: A look at the changes

These challenges prompted the government’s decision to press ahead with pension reform, a key element of Macron’s 2022 presidential election manifesto. The reforms include several important changes, including a gradual increase in the retirement age from 62 to 64, an extension of the contribution period required to qualify for a full pension, updates to the long-career scheme, measures to address work-related strain, improvements to the minimum pension and changes to special pension schemes for certain groups. The reform will apply to the public service, while leaving the specific features of public service pension schemes largely unchanged.

Outlook: Ongoing dialogue and adaptation

Although the reform has been passed, its ultimate effectiveness remains the subject of ongoing debate. Its prospects of success are being questioned because of its potential inability to cover the projected deficit in full, historical problems and the likelihood of continued social protests.