Léandre Oster refutes the Quarterly’s latest leader on Macron’s proposed pension reform.
I take the train often. In fact, in my life, I have taken it hundreds of times. So, being French, you can imagine that I have suffered more than once from the train services strikes. However, despite all those bad surprises, I could not be unsupportive of the strikes going on at the moment in France. On December 5th, 2019 a huge movement of protest began throughout the country. The last SNCF (National Society of Railroads) strike was only about a year and a half ago during 2018 Spring. And it was about… their retirement pensions. But, as a matter of fact, this movement does not only concern railway workers. It is an interprofessional strike. Workers from all horizons – even lawyers have joined lately – gather to defend their interests and to contest the new pension system crafted by Edouard Philippe’s government. The strike is also known to be that of health workers, namely doctors and nurses of the hospitals, who jointly denounce the too-little budget applied to health by the government.
As the yellow vest once did (one can still see some during the protests), the strikes and demonstrations of this winter depict the disappointment and the bleakness of French workers before Macron’s “new world” and reforming urges. Workers begin to realise that Macron’s policies will never be done for them. Is such a reform this necessary, anyway? I shall say that it is honourable to observe that Macron is sticking to his campaign promises. But a President should listen to the people and adapt to context, not keep a stiff upper lip regarding such contestations in his country.
Acknowledging the Issue of the Current System
There is an undeniable issue with the pension system’s sustainability in France, as well as in all the aging countries with a repartition system. In such a system, the contributions of the current workers are used to pay the pensions of the current retired. As the overall life expectancy rises (65 years in 1950 versus 85 years in 2000 ), there are more and more pensions to pay; and because people study longer now than ever (29% of an age generation passed the baccalauréat in 1985 versus 60% in 1995  and 80% in 2010 ), there are less workers to contribute. In 1960, there were four workers to pay one pension. Now, the ratio is 1.8 to one and is expected to go 1.2 to one in 2050 . Obviously, this stresses the need for people to work longer so as to make contributions rise and pension totals go down or at least still. It is clear that the current system needs to be reformed. Eco-demographic projections show its flaws.
Defining the Flaws in the Government’s Proposition
The fact that our current system is out-of-breath is not to be denied. However, the “good” replacement system is yet to be defined, and this is arguably not the one the government is submitting. As an authority argument, one which should even be enough to shut the project down, it is interesting to dive into the State Council’s – a council which examines every law project and advises the government (and informs the population) about them – analysis of it. It highlights several flaws. Firstly, “the law project does not create a universal regime of pensions […]. Inside the general regime, there exist five regimes”. “The State Council notices that the goal according to which ‘a contribution of one euro will give the same rights to all’ reflects imperfectly the complexity and the diversity of the contributions or right-opening rules (i.e. when can one go, with what pension level)defined by the project”.  The report goes on and on, also pointing out the postponing of the age of departure, the penalisation on the difficult years with low salary…
Moreover, this project pushes French citizens towards pensions through capitalisation due to the foreseen decreasing of the State-funded pensions. Indeed, to compensate for their loss, workers will need to save money personally besides, in order to have a decent pension at the age of retirement. And this is not without making the insurance companies happy. In July 2019, AXA published an advertisement emphasising the fact that pensions would be lower with the new system, proposing with the same token a retirement plan . But this gets even more interesting only when you find out that the very reporter of the project of reform at the Assembly, the LREM MP Jacques Maire, owns shares of an insurance company by the name of… AXA.  This reminds the Delevoye affair, leading to the resignation of the High Commissioner to the pensions (a sort of mininistre) who had allegedly omitted to declare his multiple conflict of interests when designing the reform. The government is undermining the intergenerational-solidarity based order in our pension system through this reform, and this is what causes the most anger. Hopefully, alternative ways are possible.
Fighting for the Right Answer
Other less aggressive solutions are conceivable. And we should not ignore them. One should not advocate for business as usual, but for alternative projects. For instance, one could imagine that the contribution rate would be progressive according to the size of the revenue, just as the income tax currently is in France. At the moment, contributions are proportional, which means that every employee contributes the same share x% of his or her brute wage. One cannot say whether this only could make the whole deficit recover, but it is sure that it would ease it as more money would enter the pension system
A. Bozio & T. Piketty advocate for a unique system in which not the contributions but the pensions would be progressive. They propose a common contribution rate of 25%, but a differing replacement rate y% (the amount of the pension as a percentage of your former wage). On the graph below [Fig. 1], we can see how the authors want to proceed: while in the private sector, every worker gets a replacement rate of 75% in the current system, the proposed system would take the progression of the carrier into account (Taux de progression annuel réel, real & annual progression rate, meaning the evolution of the wage each year)to better determine a more progressive, fairer replacement rate . All of this would be done by implementing a common system, as President Macron wants.
Why should wealthier people participate at a higher rate or suffer from a lower replacement rate? First, wealthier people live longer. At the age of retirement, the gap of life expectancy between the lowest and the highest professional categories (factory workers – senior executives) is approximately five to six years. “At age 35, a male senior executive can expect to live until 84 years old, while it is 77.6 for a factory worker, according to INSEE” .
Rich people live longer and hence, they receive a pension ━ which is, what is more, higher than that of the poorer ━ for a longer time; the economic issue here is that people that already earned more money during their lifetime end up getting two times more retirement pension that poorer people (more in amount and in duration, see figure 3 below from www.inegalites.fr).
Secondly, at the age of retirement, social redistribution is all the more needed that everyone should be able to die with dignity, and not in misery, hence the necessity of a more progressive system. Of course, better-off people would lose money but one could wonder whether the worse off even earn what the rich will lose. To put it in an economic perspective, we may argue that John M. Keynes theorised that poor people made a better use of their money because of a higher marginal propensity to consume. They save less and consume more. Redistributing money is not an act of charity or mere humanism; it is economically optimal. And in this regard, I state that everybody should keep striking. Strikes are never a pleasure for workers nor for society. All involved lose money. Workers and employers do lose money every hour. During the strikes, railroads workers lost between 60€ and 100€ a day. In a week, this makes a fair 560€ average. Thanks to multiple nest eggs, they could be compensated up to 50% of their wages, but the reserves are running dry. Despite all of this, they ought to fight for their pensions and for that of their descendants .
Having One’s Voice Heard
Beyond the mere issue of pension funds system reform, these protests show something else. They show unity: mere workers, lawyers and doctors had nothing to do together before. They now embody a strong voice of a huge part of the French people: 49% of the French are against the reform, and 49% are in favour. What polls highlight is that the majority of the French backing the project are those who are not affected. 67% of the individuals over 65 years old are in favour of Macron’s reform while 58% of the 35-49 years old are against .
In a speech delivered on this January 28th in the National Assembly, the leftist MP François Ruffin (“La France Insoumise” group in the Assembly) addressed the government in those terms: “You walk alone. Alone against the street. Alone against the lawyers and the hospital workers. Alone against the teachers and the factory workers. Alone against the students and the firemen.” Indeed, if in the previous protests one could have argued that seeing fights scenes between the police and French citizens was shocking, now the police and the firemen ━ universally respected and recognised for saving life and sometimes sacrificing theirs ━ are fighting unbelievable battle scenes in the streets of Paris. In several footages, firemen are beaten up by sticks and shields, next to tear gas and exploding grenades, and among insults . At this point, it is undeniable that the issue has gone way further than a disagreement on a social issue. France is set on fire and who knows what could help her recover calm and social harmony?
Yes, French strikes stink when you cannot get home or to CDG airport. But every man and every woman who supports a social country and any form of democracy should support them. Strikes do not hold French citizens hostage. The government does, and the strikes are a glimpse of hope. They are the workers relentlessly trying to free themselves from it. Across France, about 800,000 people were protesting on the first day and 615,00 on the December, 17th 2019 .
These strikes are not only about pushing the retirement age and reforming the system. The “Gallic refractory to change”, according to President Macron’s saying, fear that the reform is a step further toward free capitalism, in which pensions are only allocated regarding the deficit balance. It looks forward to letting the market decide and regulate by itself. It is to be feared that when workers will stop striking, they will lose all autonomy and be enchained to a liberalism in which only the owner decides of the worker’s fate. This does not mean progress and “new world”, but rather decline and XIX century. A world of progress must not be a world where, at the same time, some part of the population gets richer and another part gets poorer, every year. A world of progress means to lift everyone up at the same time. And if this is not possible, we should at least stop giving the rich a helping hand in letting their wealth increase, especially if it means diminishing that of the poorest. French strikes are not a selfish movement. Neither are they about the present. French strikes represent Liberty, Equality and Fraternity. Already-retired French people protest for their grandchildren, inactive people protest for their brothers or cousins. Even beyond the economic necessity of the working class to unite and contest, the strikes should keep going as they highlight a common fight that has been long forgotten, that of social rights.
 INED, Espérances de vie https://www.ined.fr/fr/tout-savoir-population/graphiques-cartes/graphiques-interpretes/esperance-vie-france/
 Les Echos, “La durée des études plafonne” https://www.lesechos.fr/2010/11/la-duree-des-etudes-plafonne-435522
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 Conseil d’Etat, Section sociale. Avis rendu sur un projet de loi organique et un projet de loi instituant un système de retraite universel. N°399.528, N°399.529. Avis consultatif adopté les 16 et 23 janvier 2020
 France Info. “L’assureur AXA a-t-il fait la publicité d’un produit d’épargne en annonçant une future baisse des pensions ?”, le 16/02/2020, consulted on the 26/02/2020 https://www.francetvinfo.fr/economie/emploi/carriere/vie-professionnelle/retraite/reforme-des-retraites-l-assureur-axa-a-t-il-fait-la-publicite-d-un-produit-d-epargne-en-annoncant-une-future-baisse-des-pensions_3787359.html
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 A. BOZIO, T. PIKETTY, Pour un nouveau système de retraite : des comptes individuels de cotisation financés par répartition. Ed. Rue d’Ulm Eds, collection Cepremap. Octobre 2016
 inégalités.fr « Les inégalités d’espérance de vie se maintiennent », https://www.inegalites.fr/Les-inegalites-d-esperance-de-vie-entre-les-categories-sociales-se-maintiennent?id_theme=19
 France 24, « Réformes des retraites : une caisse et des cagnottes au secours des grévistes », https://www.france24.com/fr/20191224-r%C3%A9forme-des-retraites-une-caisse-et-des-cagnottes-au-secours-des-gr%C3%A9vistes
Geoffrey Clavel, “Qui soutient la réforme des retraites ? Ceux qui ne la subissent pas.”. Le HuffPost, 12/12/2019 https://www.huffingtonpost.fr/entry/qui-est-pour-la-reforme-des-retraites-ceux-qui-ne-la-subiront-pas_fr_5df25188e4b06a50a2eb9e83
 Assemblée Nationale, Questions au gouvernement, François Ruffin le 28/01/2020, 15:28-15:33
 https://youtu.be/lp4HcOucsQI?t=403// – https://www.youtube.com/watch?v=-f3uAIM4CD4
 Charente libre, « grève du 17 décembre : tous les syndicats dans la rue avant les réunions sur la réforme des retraites »https://www.charentelibre.fr/2019/12/17/greve-du-17-decembre-tous-les-syndicats-dans-la-rue-avant-des-reunions-sur-la-reforme-des-retraites-direct,3532842.php