France

French pension reform enters into force despite protests and unrest

On September 1, the controversial pension reform presented by Prime Minister Elisabeth Borne on January 10 earlier this year will come into force in France. It is intended to make the French pension system fairer and at the same time combat the growing deficit in pension funds. The much-discussed bill was followed by a wave of criticism, from both the population and the political opposition.

The French Parliament was scheduled to vote on the proposal on 16 March. While the Senate, the upper house of parliament, approved the reform, the government was unsure whether the National Assembly, the lower house of parliament, was going to do the same. It therefore invoked Article 49.3 of the Constitution, which allows the government to enforce a law without a vote in parliament, provided it has the approval of the Council of Ministers. If this is the case, the Prime Minister announces that the government assumes responsibility for the law in question. The opposition then has 24 hours to table motions of no confidence.

This is exactly what happened in the case of the pension reform: After Prime Minister Borne assumed responsibility for the reform on 16 March, the Libertés, Indépendants, Outre-mer et Territoires (LIOT), supported by the left-wing Nouvelle union populaire écologique et sociale (NUPES), and the right-wing populist Rassemblement National each tabled motions of no confidence against the Prime Minister's government. However, both motions failed the next day.

Subsequent efforts by the opposition to prevent the reform through referenda failed at the French Constitutional Council. On 14 April, the Constitutional Council decided that the key points of the pension reform were constitutional. On that same evening, President Macron signed the pension reform law, which was then published in the Journal Officiel on 15 April.

The pension reform is considered one of Macron's most important social reforms. During his first time in office, in autumn 2019, he had already made a proposal to change the French pension system. At that time, the government proposed the introduction of a points system that would abolish privileges and special rights for certain occupational groups and thus make the pension system more uniform. The population responded with weeks of public protests and an incredibly low voter turnout in the local elections in Spring 2020. Macron's Renaissance party, then still known by its founding name La République en Marche, suffered significant electoral losses. The proposal was not pursued, also due to the Corona pandemic.

Higher pension, but at 64 instead of 62

The aim of the pension reform was to ease the burden on French social security funds. To achieve this, the system, which has so far been fragmented into 42 pension funds, has to be made more uniform. As a first step, some, but not all, of the 42 pension funds were abolished from 1 September.

The gradual raising of the retirement age from 62 to 64 is the key change of the pension reform and one of its opponent’s main criticism. It is already a compromise to set it at 64 years; initially, the administration wanted to raise it to 65. At the same time, the pay-in period, i.e., the number of years that must be worked to have a full pension entitlement, will also increase from 41.5 to 43 years by 2027. While this increase was already decided by President Hollande in 2014, it was meant to extend until 2030. Now, this will proceed more swiftly. Exceptions to the two increases apply, among others, to long-term employees who entered the workforce between the ages of 16 and 18, as well as those affected by occupational accidents or diseases and workers in heavy occupations. At age 67, people are automatically entitled to the full pension, regardless of how long they have been paying in.

The basic pension also increases, from about  €925 to €1,200. In addition, a cap of 120,000€ now applies to pension contributions. A deduction of 5% applies for each year that one retires sooner, while a 5% incentive is given for each additional year of employment. For individuals who have raised at least three children, a child bonus of 10% applies.

Not just riots and protests

Immediately after the pension reform was presented, unions and other civil organizations called for strikes. A first strike day was conducted on 19 January, uniting reform opponents across the country. Since then, over a million people have joined together on strike days held at regular intervals to urge the government to withdraw the pension reform proposal. Since civil servants are also entitled to strike in France, train and plane travel were severely restricted, as were staff shortages in schools, universities, hospitals, refineries, and waste disposal.

According to surveys, around two-thirds of the French reject the reform and consider it socially unjust. In particular the increases in the retirement age and the pay-in period have been strongly criticized. After all, retirement at 60, which was introduced in 1983 under President François Mitterrand, is considered one of the main achievements of the French welfare state.

But Macron's plans also receive approval: about one-third of French people are in favor of reforming their pension system. They recognise the current system's financial issues and support reform to secure appropriate and equitable pensions for all. As such, they are also support reforming the current system to reduce the long-term load on future generations. In exchange, reform advocates are willing to work two years longer.

Even after the reform was passed on 16 March, protests continued throughout the country. The strikes, which had been largely peaceful until then, became increasingly more unstructured and violent. Among other things, demonstrators set fire to Lyon's city hall. A state visit by King Charles III planned for the end of March was postponed.

Overall, significantly more young people, including students and young professionals, joined the protests led by unions and the opposition after the law was passed. Their criticism was mostly focused at the government's method: the choice not to allow the National Assembly to vote was considered undemocratic. They argue that this makes it impossible for citizens to influence new laws.

President Macron had in fact vowed to involve the legislature more and make France more democratic. It was with this vow that he gained office. As a result, many in the population feel it is unfair that the government is making such an important decision, bypassing parliament. However, Article 49.3 is used much more often by governments than assumed: since the French constitution was adopted in 1958, it has already been used 89 times, by governments of all ideologies.

The reform is without question one of President Macron's most controversial projects. However, the wider impact on him and his Renaissance party remains to be seen. Although the latter is suffering heavy losses in current polls, the next presidential elections will not be held until 2027.