The proposed pension reforms in France have met with strong opposition, including strikes and massive street protests that are set to continue in October. But just what are the objections leveled at what is viewed as President Nicolas Sarkozy’s single, major reform of his term in office?
1) It taxes the workforce, but demands little of businesses and the wealthy
In its explanations of the proposed reforms to pensions, the government has centred upon an easy-to-grasp argument: the size of the active population is ever-diminishing, while the numbers of retired people are constantly increasing. The problem, therefore, is demographic (although this argument is tenuous), as is also the solution, which is that the French must work longer.
The minimum legal age of retirement has, as a result, been raised from 60 years to 62 years, a stage that will be reached gradually, through yearly increments of four months. The legal age is when one is able to claim retirement, whether all the contributions have been met or not, and it is a legal right. Clearly, by raising the retirement age, a lot more money fills into state coffers, because extra contributions are paid in by those in employment. This measure has become a pillar of the government’s reform, allowing it to revoke a previous retirement reform, introduced under the Left in the early 1980s, which brought the legal age down from 65 years to 60 years.
Meanwhile, the age at which one can claim a full pension – that is, a pension with no deductions - is also pushed back by two years; until now that stood at 65 years, but will become 67 years. The money gained will represent 20 billion euros per year by 2020, which will cover most of the pension costs. New company and wealth taxes have also been announced, but these will bring in just five billion euros per year.
In his report for the French parliamentary finance commission, published in July, the UMP [1] Member of Parliament Laurent Hénart concluded that the reform “penalised the workforce” and “hoped that the social and fiscal revenues to be announced in the autumn will lean towards a greater balance between revenues raised from the workforce and revenues raised from capital.”
2) It ignores the social inequalities of life expectancy
The government says that the French spend more time in a state of retirement than any other nation. This is true: according to the OECD, the period lived in retirement in France represents an average 24.5 years for men, and 28 years for women. Globally, the expectancy of the period of life in retirement in France is an enviable one.
The problem is that not everyone benefits from this equally. “Retirement only has a sense if one is in good health,” explained Philippe Askenazy, a researcher with the French National Centre for Scientific Research (CNRS).”By concentrating on the question of life expectancy, one ignores the reality of inequalities.”
The life expectancy of a manual worker is seven years inferior to that of a manager, according to the French national statistics office (Insee). The French National Institute of Demographic Studies (Ined) argues that manual workers are subject to a ‘double sentence’ because of the conditions of both their work and their lives. “Within a shorter life, they spend more time than others from periods of [physical] incapacity,” the Ined reports. “Manual professions are in general particularly hit by limitations of physical or sensorial functions, which apply to more than 60% of the years left to live after the age of 60 years.”
To push back the minimum legal retirement age to 62 for everyone appears therefore unjust, for it is managerial-level professionals who will, once retired, benefit most from retirement, and for a longer period
3) It penalises women and the worst-off
According to the national office for retirement insurance (the Cnav, the basic national retirement pension fund for the private sector), 63% of those who claimed retirement in 2009 had paid four quarterly contribution amounts (equal to a year’s contributions) too many, and one in two had paid eight quarterly contributions too many.
This is the case of many manual workers and employees who began working at a young age. Under the proposed reforms, they will now work two years more. “If we make those who have long careers pay, it is a class reform!” commented university lecturer and specialist in retirement pension systems, Anne-Marie Guillemard.
Aware of the pitfall, the government will extend the ‘long career’ scheme, set up in 2003 under the ‘Fillon reform’ to selectively allow early retirement. Those who began working at the age of 17 can stop working at 60, or less – but only after validating 43 years of contributions. Unlucky are those, however, who began working at the age of 18, and who are not taken into consideration by the scheme. They must – and upon reaching the minimum legal age of retirement - meet 44 years of contributions.
If, in the French private sector, the average retirement age is established at 61.5 years old, in reality many leave employment earlier. According to OECD figures, this is at 58.7 years for men and at 59.5 years for women, explained by the comparatively low rates of employment opportunities for older people in France. What happens between these two discrepant ages? Many are job seekers, or inactive, or on sick leave or in transitional programmes, and they remain so until reaching retirement age.
“Over recent years, instead of energetically confronting the problem of employment among senior age groups, France has done nothing other than to raise the latency period between the last date of employment and the retirement age,” said Anne-Marie Guillemard. It is for this reason that the French Left opposition parties have warned that the reform will turn “the young retired into long-term unemployed.”
It is above all a case of financial sleight of hand, whereby the pension payments schemes will be better off while unemployment payments and other welfare schemes will be put under strain.
The pushing back of the age when one can claim full retirement pension benefits, from 65 to 67, will penalise all those who have had interrupted careers, and difficult professional paths.
Writing in the revue Alternatives économiques, the economist Thomas Piketty, a lecturer at the Paris School of Economics, commented: “To push back the legal age for full retirement pension benefits beyond 60 years is above all, in the current context, a means of very quickly recovering some one or two billion euros on the backs of those in the most fragile position. It is socially unjust and resolves nothing.”
“Apart from foreigners, 80% of people [in France] are no longer working above the age of 65,” said Labour Minister Eric Woerth. That may be the case, but among the remaining 20% are people in precarious situations, who have suffered several periods of unemployment. They are made up of many women, who have interrupted their working activity either to bring up children, or because they are statistically more likely to be affected by part-time working, unemployment and ‘descending’ careers which see a fall in their salary.
Several opposition members of parliament, along with several militant associations, have lodged complaints with the French national agency against discrimination, the Halde, that the reform bill represents “a discrimination against women."
4) Working conditions may deteriorate
Can French people work beyond the age of 60? Many specialists are concerned by the question. Not because the French are lazy, but because workplace conditions can be very difficult in France. “France has made no progress concerning the sustainability of work, and has not made conditions easier for the posts that the senior ages occupy,” commented Anne-Marie Guillemard who has carried out a comparative study of how individual European countries take into account ageing among the active populations. France is low in a table of those engaged in efforts to meet the problem. “The 35-hour week intensified working activities, and priority was given to reducing costs,” she said.
Numerous studies show that employees in France do not want to work beyond the age of 60 because of the intensification of working rhythms, stress, a feeling of isolation and a lack of recognition of their contribution. The economist Catherine Pollak, a lecturer with the Sorbonne University, has studied the results of several Europe-wide reports on conditions in the workplace. Her conclusion is that “the performance of France is close to those [countries] of southern Europe, far from the leaders in the field which are the north European countries.”
“French employees don’t necessarily have more constraints, but they indicate that they are paid less,” she added.
Jocelyne Machefer is a company doctor in the region close to Le Mans, western France. “With the pushing back of the legal retirement age we run the risk of seeing a return of [the category of] people with [a working] inaptitude at 60, which allows those concerned to claim a pension on full benefits as of the age of 60, but which was made obsolete by the reduction of the legal retirement age,” she commented.
“Quite often, in agreement with the social assistant, we elaborate a plan for those 56 or 57 year olds who are ill,” said her colleague Pierre-Alain Jarry. “We manage to set out a path for them that will allow reaching retirement age without causing too much pain, such as by using the unemployment [benefits] card. From now on, that risks becoming harder to do.”
The fat has gone,” says another doctor, Nicole Lancien. The ‘fat’ in question describes those physically less demanding jobs, which have now disappeared. The result is that companies have no room for manœuvre in designating a new job to an employee whose post has been axed. To avoid their patients being made redundant, some doctors sometimes have to declare ‘apt’ for work those who are not.
5) An arbitrary review of work-related health problems
The government boasts that it has taken into account the question of those whose health is compromised by particularly difficult working conditions, described in French as la pénibilité. Every year, those employees who prove before a social security (welfare) department doctor that they suffer a 20% incapacity of their normal physical functions may retire at the age of 60. This could affect 10,000 people per year. But trades unions and a number of labour experts criticise these individual tests (which were lobbied for by the French businesses federation, the Medef), because of what they see as the danger of arbitrary decision-making.
In reality, the total number of those eligible for the scheme is very restricted. “At the age of 55 years, one employee in two suffers from handicapping shoulder problems,” said Annie Touranchet, an inspector-doctor with the Regional Department of Labour for the Pays de Loire region. “But [even] if you cannot raise your shoulder above 90°, your level of invalidity is [officially recorded as] just 5%.” Furthermore, only those with recognised work-related health complaints, or who have suffered accidents at work, are eligible.
“It would have been better to take into consideration risk factors, like night shifts and other situations which cause handicaps,” continued Annie Touranchet. It is established that, beyond the age of 40, night work systematically damages a worker’s health. Millions of workers are daily exposed to carcinogenic or toxic products (referred to in France as the ‘CMR’ category). For all those whose connected illness only appears several or many years after being exposed to the danger, such as during retirement, there is no provision.
“It is not an ideological position,” explained Minister of Labour Eric Woerth, “it is quite simply that we do not today dispose of a means to rigorously measure from what level of exposure the probability of becoming ill becomes a near certainty.”
The French National Association of Victims of Asbestos Poisoning, the Fnath, says “the government excludes from its scheme the maximum number of people who are victims of working conditions.” Also excluded are those who have been victim of moral harassment or other mental sufferance, which are often officially rejected for consideration as a work-related illness. However, OECD expert in retirement issues, Monika Queisser, commented: “Mental health problems are those that have shown the greatest progression in OECD countries.”
Mathieu Magnaudeix