The pension reform that rocked France in recent weeks is not revolutionary from an economic point of view, says a French professor. The French are still at the barricades.
Paris
“Here a lot of energy has now been spent” – but on something that is not worth it.
Professor of Economics at the University of Orléans Anne Lavigne talks about the crisis caused by the pension reform in France.
Lavigne knows the French pension system from the bottom up, as she worked for a long time in the pension council made up of experts and members of parliament, which advised the government on pension matters.
The controversial pension reform, if passed, will not make the French economy flourish. “And the state won’t go bankrupt if it doesn’t go through,” says Lavigne by phone from Orléans.
In Parliament The pension reform that went ahead without a vote last Thursday has shaken France in recent weeks. President Emmanuel Macron said in a live television interview on Wednesday that he is not going to back down from his “necessary” pension reform. On Thursday, the French organized a general strike and more than a million people demonstrated furiously in the streets around the country.
According to Lavigne, there would have been no absolute rush for the pension reform. Of course, he is clearly aware of the state budget deficit, which must be reduced somehow.
“It is about ten billion euros. Is it a lot or a little? It corresponds to the amount that France spent on free corona tests during the pandemic,” says Lavigne.
“Instead of pension reform, the alternatives would have been, for example, to raise social security contributions or reduce the pensions of those already retired. It’s still more about a political choice and the fact that the president sends a promise of effort to his European partners, who may have wondered about France’s continued indebtedness”
The pension reform now underway is Macron’s second. The first proposal was prepared and started to be pushed through in March 2020, until the corona pandemic froze it. According to Lavigne, it is important for Macron that this time the pension reform does not fail, as he wants to leave his mark as a president who strengthened the French economy, a symbol of the start-up nation.
Multi the president has tried to touch the French pension system before with little success. According to Lavigne, the French pension system is one of the crookedest in the world.
“I don’t think that many protesters know how to calculate their own pension. Even economic experts have difficulty understanding the system, it is architecturally so difficult.”
Lavigne lists that there are forty pension systems and there is a basic and supplementary pension.
“France does not have an automatic pilot system for pensions, where pensions are tied to life expectancy and where they are adjusted and evaluated annually, as in almost all other European countries, but here they are closely linked to economic growth,” says Lavigne.
Lavigne estimates that French pensions are “still very generous”. Poverty among pensioners is low and the standard of living is high. The pension reform will not affect them, but it would punish the generation planning to retire soon, the French born in 1961-72, the most. That about Lavigne is unfair.
“France does not have a proper culture of social dialogue, and you can see that in the way this reform has progressed. For example, I admire the way in Finland the end of people’s careers has been reorganized. Why can’t we do it? I dream of a Finnish consensus. Or from the Swedish one, that the pension reform would be prepared a long time in advance and that it would be examined thoroughly,” says Lavigne.
The economist reminds that France’s retirement age would have risen to 64 by 2030-2035 in any case, as few French people would have accumulated the “points” entitling them to a full pension by age 62.
Why why did the french protest the raising of the retirement age so furiously?
“This is not only about the pension reform, but about the general mistrust towards Macron and politics. Macron represents to the people a pure intellectual elite, a technocrat who is confident in his knowledge and skills,” says Lavigne.
The pension reform is now under review by the Constitutional Council. According to Lavigne, we also have to be prepared for the fact that the reform will not go through in the end. Changes to the reform are guaranteed to be made.
“Even though I don’t think the reform is completely necessary, it will be beneficial in terms of stabilizing the European Union’s economy when it goes through. Even if it won’t shake or change the French economy, as an economist I still can’t argue against the fact that people working a couple more years would have a mechanical economic benefit for France as well. That’s what Macron is betting on,” says Lavigne.
If the reform won’t go through, according to Lavigne, the citizens will think that they have won and the government will have to think about where they are missing ten billion before they get it.
“My biggest worry and biggest tragedy is that nothing changes,” he says.
Lavigne is still not worried about the future of the French economy.
“The French economy has survived the many recent shocks without major dents, because we have, for example, our own nuclear power and we are a moderately strong agricultural country.”
Unemployment has also decreased under Macron.
“We are now starting to see the results of investing in youth employment in particular. The corona pandemic and the war have disciplined the French economy, and it is only normal that growth starts to rise a little slower than usual,” says Lavigne.
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