Macron pension reform ends cherished French exception

French President Emmanuel Macron has pushed through a pension reform that is unpopular, but at a great cost to his own political capital. He now seeks to restore it by offering discussions with unions about other issues.

Some foreign commentators wondered why there were so many protests. His pension plan simply brought France in line with the European Union.

This does not take into account the fact that the French regarded the 62-year-old retirement age as an important social benefit, nor the concern of many workers who were excluded due to their personal circumstances and face a later retirement.

CAN THE FRENCH RETIRED EARLIER THAN OTHERS?

Theoretically, yes. France, along with Greece, has the lowest retirement age of the European Union. The average for the 27 member states is 64.8.

According to the Organisation for Economic Cooperation and Development, the French retire longer than most other countries due to their relatively lower retirement and higher life expectancy.

According to the OECD, a Frenchman spends on average 23.5 years retired. This is second only behind Luxembourgers who spend 24 years retired and far above the 20-year retirement period that men in Britain or Germany experience.

ARE THEY BETTER OFF THAN OTHER PENSIONERS?

The French pension payment as a percentage of earnings before retirement is higher than anywhere else. According to the OECD, a French retiree’s post-tax pension income is nearly three quarters of his or her pre-retirement earning. This compares with 58% for Brits and 53% for Germans.

This generosity comes with a price. France spends almost 14% of its economic output on pensions. This is almost double the OECD's average of 7.7%. Only Italy and Greece spend more than France.

France has the lowest poverty rate among developed countries for retirees, at 4% compared to an OECD average 13%. Inequality rates are also lower.

Does Everyone Benefit?

Not exactly. France is known for having a low retirement age. However, this picture is not as clear-cut as it seems.

Macron's reform moves the target date for 43-year-old workers to 2027, from 2035.

According to the independent council that analyses pensions for the government, more than a third of French workers are already leaving the workforce after 62.

Many people who have started their careers late due to higher education or took time off to raise children, are forced to continue working well beyond the age of 62. After Macron's reform, anyone can retire at 67 and receive a full pension no matter how long they have paid in.

According to the OECD, the average retirement age of a Frenchman who began working at the age of 22 is 64.5. This is slightly higher than the EU's average of 64.3 years but still behind Germany's 65.7%.

In many countries, however, the legal minimum age for retirement is lower because of the exceptions that many countries make to early retirement. Some people even retire before they have earned a full pension.

In France, the average age at which people leave the labor market is 60.4, significantly lower than the OECD's average of 63.8.

What now?

In a prime time televised speech on Monday, Macron explained that "working longer, like our European neighbors have done", would create more wealth and allow for greater levels of investments.

The opposition parties and unions claim that Macron's plan is a violent attack on the welfare model of the country, which relies heavily on taxes and pension contributions to fund generous social benefits.

Macron's government claims that raising retirement age will fill a shortfall of 13.5 billion euros the pension system otherwise would be experiencing by 2030.

A study released on Tuesday (18 April) by Rexecode, an economics think-tank, suggested that the expected gains of the government were too optimistic and there would still be a deficit.

Share this article: