France is in danger of facing a series of mass protests and strikes in the near future in connection with the upcoming pension reform. French President Emmanuel Macron promised to hold it during his election campaign. For France, which is on the verge of a recession, a wave of strikes can only hit economic growth harder, although it will not work to refuse to carry out pension reform – the system is too unbalanced, Bloomberg notes .
The intention to hold strikes, regardless of the parameters of the pension reform, as the agency notes, was warned even by trade unions loyal to the reform. President Macron has promised to raise the retirement age from the current 62 years to 65, which is not supported by the majority of the French, according to recent opinion polls, and a quarter are in favor of reducing the retirement age altogether. However, to stabilize the finances of France's long-running pension fund, as well as to support economic activity among older citizens, reform is needed.
The agency notes that the pension reform is a turning point in Macron's political career. Fulfilling the election promise will lead to mass protests, and the failure to reform will undermine Macron's reliance on the business that supported him for two presidential terms and for which Macron carried out other reforms in France. The timing for reform is not the best: the French economy is on the verge of recession due to high inflation and expensive energy products, the prices of which jumped after Russia's invasion of Ukraine.
France's budget is also under pressure after two years of bailouts amid the coronavirus epidemic, as well as stimulus payments and benefits due to the energy crisis. The French pension fund deficit without changes in the current legislation is estimated at 0.8% of the country's GDP over the next 10 years. The agency notes that such problems slow down other sectors of the economy, on which the authorities planned to spend money in the coming years. We are talking about investments in the development of industry and green energy.
The authorities cannot delay the reform either: the solution of the problem has already been put off for a long time. The last time the presentation of the program was postponed from December to January, so as not to provoke an economic collapse at Christmas and New Year's holidays. Moreover, Macron and his team figured they could get some unions on their side to mitigate the effects.
To reduce the reaction to the reform, the authorities are considering various options for its implementation. One of them, proposed by the head of the Ministry of Labor Olivier Dusso, is to increase the retirement age not by three years, but by two, as well as to speed up the period for deducting pension savings to the fund (this should offset the losses from a lower retirement age). However, even this, milder version of the reform does not suit the trade unions. They note that it unequally places low-paid employees who will lose from this reform. As an alternative, unions are proposing to oblige French businesses to keep older workers for a longer period of time, which would keep contributions to the fund.
In addition to the opposition from the trade unions, the reform is likely to divide the French Parliament as well. In the last elections, Macron's party "Together" did not gain a constitutional majority, so it can only accept such a reform in a coalition with the Republicans. Those have already stated that they are ready to support the reform only if the minimum pension rises to €1.2 thousand as a result of it, and the age limits are lower than Macron originally announced.
The agency recalls that Macron can formally take advantage of a loophole in the law and adopt a document without the opinion of parliament, using Article 49.3 of the constitution. However, this decision is likely to only further anger opponents of pension reform. In addition, Macron has already resorted to this article when the government needed to approve the French budget.
