As soon as once more, the “urgency” of extending the retirement age dangers being misunderstood by the French. Monday, September 12, Emmanuel Macron took benefit of the upcoming publication, this Thursday, of the annual report of the Pensions Orientation Council (COR) to relaunch his reform undertaking, which might notably prolong the retirement age, to 64 or 65 years previous – towards 62 at present.
The reform can not wait, underlined the president in entrance of the press, slipping that he wished an implementation from 2023. The undertaking may very well be inserted within the fall within the Social Safety price range. However why is that this reform so crucial? To reply to this level, the federal government has been tackling for the reason that presidential marketing campaign, looking for to search out the argument that can lastly reach convincing the French to work longer.
1. The parable of the system in peril
In the course of the presidential marketing campaign, Emmanuel Macron had significantly insisted on the necessity to prolong the authorized retirement age to 64 or 65 to “save the pension system “. “Anybody who tells you that we will hold issues as they’re is mendacity. This technique is in deficit, will probably be for a number of years, it’s the demographic actuality “he asserted in April on France Inter.
The Emmanuel Macron of 2022 then contradicted that of 2017. The one who supported a whole reform of the system for the sake of “transparency” and “fairness”whereas noting that there was “no monetary motive” to switch it. Final April, the campaigning president justified this primary reversal by a change within the evaluation of the Pensions Orientation Council and the outbreak of the Covid pandemic.
Since then, the federal government has ensured that there’s an emergency. Bruno Le Maire flew to the help of the president on April 12 on CNews, talking of “save our pension plan”. And Olivier Dussopt, the Minister of Labor, so as to add a layer in level this Monday, making certain that “pension reform is critical” automobile “the pension system just isn’t financially balanced”.
Downside, the pension system has been in surplus since 2021. It may even generate a surplus of three.2 billion euros this 12 months, as a consequence of a rise in financial exercise. Nevertheless, this is not going to final. The system ought to as soon as once more develop into loss-making, at the least till 2030. However this downward slope is managed by the reforms carried out beforehand.
These will particularly result in a discount within the quantity of pensions in relation to wages within the coming years. The share of pension expenditure in relation to GDP – probably the most related indicator for measuring the reliability of the system – will even be secure, though at a excessive degree (between 12.1% and 14.7% by 2070).
“The outcomes of this report don’t validate the deserves of the discourse that places ahead the thought of an uncontrolled dynamic of expenditure”underlines the brand new report of the Pensions Orientation Council, which can be revealed this Thursday, however has been consulted by a number of media together with the world. The federal government’s budgetary catastrophism is subsequently overplayed.
2. The necessity to maintain development
To revive “independence” of the nation, Emmanuel Macron hammers an answer: work extra and longer, particularly by reforming pensions. That is what the soundness program for the interval 2022-2027 gives, in convoluted phrases, a doc whose vocation is to be transmitted to the European Union.
“The productive capability of the economic system could be supported by the federal government’s reforms and investments, which might contribute particularly to growing the labor provide and attaining full employment: pension reform, reform of the RSA, continuation of the reform of unemployment insurance coverage…” anticipates the doc, by shelling the decried reforms on which the federal government is working.
In response to OFCE analyzes (French Observatory of Financial Situations), the pension reform may thus improve the quantity of labor. 240,000 folks, who would have retired below present laws, would proceed to work by 2027. Regardless of every part, the OFCE stays very cautious about the opportunity of attaining full employment, because it nonetheless plans 7.5% unemployment in 2027.
These economists additionally anticipate a comparatively weak impact of the reform on development. “The potential development of France (the one which the nation can preserve in the long run, editor’s be aware) could be 1.2% in 2022 then improve quickly to 1.four% in 2023 and 2024 because of the affect of the pension reform on the energetic inhabitants”they write.
three. Financing the ecological transition
Hammered for a number of months by Emmanuel Macron and members of the federal government, the earlier arguments didn’t actually arouse the assist of the French. Emmanuel Macron subsequently appears to have modified his footing. To the press, this Monday, September 12, he justified the reform, explaining that it might make it doable to finance sure main tasks, comparable to power transition, faculty or well being. Olivia Grégoire, ephemeral spokesperson for the federal government final spring, justified the extension of the authorized age by the necessity to finance “significantly the query of autonomy, of dependence”. As if every part may very well be financed by financial savings on pensions…
“It is a delusion”estimates the economist Henri Sterdyniak, questioned by Marianne. “To perform a real ecological transition, it might be crucial, for instance, to speculate in a short time the equal of four to five factors of GDP. Nevertheless, pension expenditure is an enormous ship that can’t be modified shortly. Within the brief time period, not a lot might be completed. Within the medium time period, the State might not need to spend much less cash to fill the system by spending on civil servants’ pensions and particular schemes. However this is able to solely generate financial savings of round 1% of GDP [soit 23 milliards d’euros environ] »continues Henri Sterdyniak.
four. The taboo of the promise made in Brussels
The true downside, in response to the Pensions Orientation Council, is that the longer term expenditure of the pension system just isn’t “suitable with the federal government’s targets when it comes to public funds”. Clearly, the manager intends to tighten the handbrake on public spending, whereas the nation is fighting a interval of historic inflation, which has already required the implementation of quite a few social measures. And that, Emmanuel Macron explains it a lot much less clearly to the French, even when he promised it in Brussels. Its targets are nevertheless clear, and included within the “stability program” for the interval 2022-2027.
On this doc, the federal government guarantees to scale back the general public deficit (i.e. the distinction between authorities income and expenditure) to three% in 2027. This is likely one of the guidelines of the Maastricht Treaty, the founding act of the European Union in 1992, placed on maintain for the reason that Covid-19 pandemic. To attain this three% goal, all public spending should be restricted in quantity to zero.6% over the following 5 years. “Nevertheless, pension expenditure, which represents 1 / 4 of this public expenditure, would improve over the interval by 1.eight% in actual phrases”warns the following report of the COR in response to the echoes. A significant downside for the federal government, which appears to make reform the alpha and omega of its coverage of budgetary restriction. And that’s a lot much less of a vendor than guarantees of prosperity.