French Government Unveils Plan to Raise Retirement Age to 64

PARIS — The French government on Tuesday unveiled long-expected plans to raise the legal age of retirement to 64 from 62, part of changes to the country’s pension system that President Emmanuel Macron has vowed to see through a fractured Parliament despite weak popular support, hostile labor unions and the threat of disruptive strikes and protests.

Mr. Macron’s last attempt to change the pension system in 2019 prompted massive street protests and one of the longest transportation strikes in France’s history, until the Covid-19 pandemic hit and the government shelved the plan.

Back then, the government did not intend to raise the retirement age and was aiming instead for an overhaul of the pension system’s architecture, by consolidating 42 different programs into a unified system — plans that left many French people confused and worried that they would end up with less money.

Mr. Macron’s newest plan is a more straightforward attempt to balance the system’s budget by making the French work longer, a move that is still likely to meet strong popular resistance.

The latest attempt also comes at a time of heightened social strife, fueling worries that anger over pensions could snowball into a winter of discontent, in a repeat of the Yellow Vest movement — a revolt against higher fuel taxes that morphed into broader protests — that rocked Mr. Macron’s first term.

Labor unions have promised strikes and demonstrations over the proposals, even though analysts say the country’s ability to stomach weeks of social unrest might be diminished after an exhausting Covid-19 pandemic and persistent concerns over inflation and energy prices.

Mr. Macron, who made a pension overhaul a cornerstone of his successful re-election campaign, argues that he has a strong mandate and that France’s complex but generous, state-backed pension system will run an unsustainable deficit if nothing is done.

“We have to be able to face reality and find solutions to preserve our social model,” Prime Minister Élisabeth Borne said at a news conference on Tuesday to announce the plans, which brewed for months at the highest levels of French government as Mr. Macron’s allies debated how to proceed. They ultimately backed down from his campaign vow to raise the retirement age to 65.

Instead, Ms. Borne said, the government plans to gradually raise the legal age of retirement to 64 by 2030, starting this fall, and to accelerate a previous change that increased the number of years that workers have to pay into the system to get a full pension. France’s Parliament will begin discussing the pension bill in February, and Mr. Macron hopes it will be passed into law by the summer.

“This will indeed be the year of pension reform, which aims to ensure the balance of our system for the years and decades to come,” Mr. Macron said in his New Year’s Eve address. “We need to work more,” he added, to “pass on to our children a fair and durable social model, because it will be credible and financed in the long term.”

Mr. Macron’s party has a tenuous majority in the lower house of Parliament, and all left-wing parties, as well as the far-right, are opposed to the plan; some have vowed to bury the pension bill in an avalanche of amendments.

But France’s Republicans, its mainstream conservative party, have signaled willingness to vote for a version of the plan. Without that support, the government would be forced to use special constitutional powers to ram it through the lower house.

Mr. Macron’s government has used those powers before for budget bills, but resorting to them on far more consequential and contested legislation could inflame tensions at a time when the government is already racing to defuse budding crises — most recently, by swiftly offering financial relief to angry bakers facing sky-high energy prices.

Éric Ciotti, the leader of the Republicans, said in a recent interview with the Journal du Dimanche that his party had demands of its own but that France’s “budgetary, demographic and economic situation” justified retirement changes.

“Any reasonable person understands that the current system cannot continue without reform,” he said.

But labor unions, despite weeks of meetings with the government, have already unanimously rejected Mr. Macron’s plan. They are expected to call for massive strikes and street protests that they hope will force his hand.

Frédéric Souillot, the head of the Force Ouvrière union, said recently that if Mr. Macron wanted to make his pension plan “the mother of all reforms, for us it will be the mother of all battles.”

Even moderate unions that are open to tweaking the existing system say that raising the legal age of retirement is a non-starter. They say it will unfairly impact blue-collar retirees with arduous jobs, who often start their careers earlier and have shorter life expectancy, on average, than white-collar ones.

Laurent Berger, the head of the C.F.D.T., or French Democratic Confederation of Labor, a moderate union that the government unsuccessfully courted, told Le Parisien recently that pushing back the retirement age was “the most unfair” way to reform pensions.

“There will be no deal with the C.F.D.T.,” he warned.

State-guaranteed pensions are widely cherished as a hard-won right by the French, who enjoy one of the lowest rates of pensioners at risk of poverty in Europe. Polls show that public opinion is against raising the retirement age and is not sold on the urgency of reform, especially given that France already struggles with senior unemployment.

“For many French people, retirement is kind of the only moment in life where you fully take advantage of your freedom,” said Luc Rouban, a senior research fellow at the Centre for Political Research at Sciences Po in Paris.

To mollify resistance, Ms. Borne unveiled measures that the government says will make the system fairer, like an increased 1,200 euro, about $1,300, minimum monthly pension, continued exemptions allowing those who begin working at younger ages to retire earlier and measures to help seniors stay employed.

“We are not equal before work, one cannot ask everyone to all work longer in the same way,” Ms. Borne said. She estimated that four out of 10 seniors would still be able to retire before 64 under the new reforms.

While French workers can build up private retirement savings, that does not constitute the backbone of the system. Instead workers and employers pay mandatory payroll taxes that are used to fund the pensions of retirees.

That balance has grown increasingly precarious as life expectancies increase. In 2000, there were 2.1 workers paying into the system for every one retiree; in 2020 that ratio had fallen to 1.7, and in 2070 it is expected to drop to 1.2, according to official projections.

In 2021, the average age of retirement in France — for those who were part of the general pension program — was roughly 63; but some workers are able to retire earlier.

Mr. Macron says the system should be put on surer financial footing now, to avoid painful cost-cutting measures in the future. Opponents accuse him of painting an overly gloomy picture. Analysts say both have a point.

“When pension issues were discussed before major reforms in the 1990s or 2000s, pension spending had exploded as a percentage of national income, but today that’s not the case,” said Antoine Bozio, an economist at the Paris School of Economics.

The French pension system ran a 900 million euro surplus in 2021, one that is expected to grow to 3.2 billion euros in 2022, according to the latest official figures.

But “that doesn’t mean that there isn’t a problem,” Mr. Bozio added, because the system’s deficit is expected to grow again starting in 2023, although there is disagreement over how serious that is and how quickly it needs to be addressed.

At stake, Mr. Bozio said, is Mr. Macron’s ability “to present a reform that increases the retirement age, but is not perceived as particularly unfair.”

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