Emmanuel Macron, the French president, has pushed through a pensions reform that is unpopular but comes at a high cost to his political capital. Now he is trying to regain it by offering unions discussions about other issues.
Some foreign commentators questioned why there were so few protests. His pension plan brought France into line with the European Union.
The French considered the retirement age of 62 years old as a social benefit. Many workers were also concerned about a delayed retirement due to personal circumstances.
CAN FRENCH RETIRED EARLIER?
Theoretically, yes. France and Greece have the lowest retirement age in the European Union. The average retirement age for all 27 EU member states is 64.8.
The Organisation for Economic Cooperation and Development (OECD) states that the French retire later than other countries because of their lower retirement age and longer life expectancy.
According to the OECD a Frenchman retires for an average of 23.5 years. It is only second to Luxembourgers, who retire for 24 years. This is far more than the 20-year period of retirement that men in Britain and Germany have.
ARE THEY BETTER OFF THAN OTHER PENSIONERS?
As a percentage, the French pension is the highest in comparison to earnings prior to retirement. According to OECD data, a French pensioner’s income after tax is almost three-quarters of their earnings before retirement. The British and Germans are both at 58%.
The price of this generosity is high. France spends nearly 14% of the country’s economic output on pensions. It is nearly twice as much as the average of the OECD, which is 7.7%. Only Italy and Greece spent more than France.
France has the lowest rate of poverty among developed countries, for retirees. It is 4% compared with an OECD median of 13%. The inequality rates are lower.
Does Everyone Benefit?
Not exactly. France is well-known for its low retirement age. This picture is not quite as clear as it appears.
Macron’s reform shifts the target date for workers aged 43 to 2027 from 2035.
According to the independent council which analyses pensions on behalf of the government, over a third (35%) of French workers have already retired after the age 62.
Many people, who started their career late because of higher education or had time off for raising children, have to work well past the age 62. Anyone can retire at age 67, no matter how much they’ve paid in.
According to the OECD the average retirement age for a Frenchman that began working when he was 22 years old is 64.5. It is slightly more than the EU average of 64 years, but still well behind Germany’s 65.7%.
In some countries, the minimum legal age of retirement is lower due to the exceptions made by many countries for early retirement. Some people retire even before they receive a full pension.
The average age of people leaving the French labor market is 60.4, which is significantly lower than the OECD average of 63.8.
What next?
In a prime-time televised address on Monday, Macron explained how “working longer like our European neighbours have done” would allow more wealth to be created and greater investment levels.
The opposition parties claim that Macron’s plan is an attack on the welfare system of the country. This model relies heavily upon taxes and pension contributions in order to fund generous benefits.
Macron’s government says that increasing the retirement age will cover a deficit of 13.5 billion euro in 2030, which would otherwise be experienced by the pension system.
Rexecode is an economics think tank that released a study on Tuesday (18th April). The report suggested that the gains expected by the government are too optimistic, and there will still be a surplus.
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