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France’s Great Pension Swindle

The recent financial crisis has again demonstrated the inherent instability of capitalism. It could be argued that the current pensions reform concocted by the Fillon government is showing the inherent instability of Sarkozyism. On 7 September, 3 million people took to the streets for the biggest one-day strike in years. The strike action was supported by 70% of the public. Workers were protesting against the government’s plan to raise France’s legal minimum retirement age from 60 to 62, and from 65 to 67 to benefit from a full pension.

An employee will have to work 41 years in 2012, 41 years and 3 months in 2013 and 41.5 years in 2020 in order to claim full pension benefits. This change is deeply unfair for unemployed workers, part-time employees (notably women), people who have started to work at an early age and for students who have entered the job market at a late stage. These vulnerable categories will have to work beyond the new statutory threshold of 62 to earn a decent pension.

Yet, the neoliberal narrative says, isn’t France the most “privileged” country in Europe when it comes to pension regimes (which are deemed “generous”), public services (obviously “bloated”) or working hours (which allegedly make France economically “uncompetitive”)? If the Sarkozy-Fillon reform goes through, the Conseil d’orientation des retraites (Cor) estimates that France’s system would become one of the harshest in industrialised countries (Germany’s new legal minimum of 67 will only be implemented in 2029).

Still, the neoliberal story goes on: isn’t there an “insoluble” demographic problem here? The system is allegedly coming under intolerable strain as the postwar baby boomers leave the workforce, with the prospect of a longer lifespan in retirement as a result of improvements in diet, medicine and lifestyle. This is a cynical and offensive argument. First, what matters is not life expectancy in abstracto, but life expectancy in good health. In France, it is 63.1 years for men and 64.2 for women. Blue-collar workers have a good health expectancy, which is 10 years inferior to professionals.

Second, to delay the legal minimum retirement age by two years won’t help sort out high unemployment among young people. Third, the “demographic” argument creates a crucial political diversion. The government has refused to consider increasing general contributions, notably employers’ contributions. As usual, profits will remain in private hands whereas the public will always foot the bill when banks or firms fail. As a consequence of this deliberate political choice, 84% of the €30bn to be invested in pensions by 2020 will be paid by employees and only 7% by employers. Independent studies have shown that it would take a 15% increase in general contributions between 2010 and 2050 to keep the system afloat – an increase of 0.37% per year.

French people categorically reject British or US-style pension funds and defend their “pay-as-you-go” pension system. Who would blame them? Should they stoically embrace casino-style pension regimes on the grounds that other European countries have implemented them? In the end, it all boils down not to demography, but to politics. European governments have responded to the latest cyclical crisis of capitalism by imposing fierce austerity measures on their peoples. In London, Athens, Berlin or Paris, they pursue the same political agenda (cuts to salaries, public services and pensions), that hits workers hard.

In France, there is more to it. For Sarkozy, the reform carries symbolic importance. It would reverse decades of cutting the time people spend in work (François Mitterrand lowered the retirement age from 65 to 60 in 1983 and Lionel Jospin launched the 35-hour week in 2000). Sarkozy has already accomplished his fair share of “pro-market” reforms: he has loosened labour laws, encouraged overtime and, more infamously, implemented the so-called “fiscal shield”, which handed back €586m in taxes to the richest last year.

This pension reform should be seen as the ultimate weapon to split and demoralise his political opponents. But the risky strategy may be about to backfire: unions appear to be galvanised and the left is, surprisingly, united. Even the moderate and inconsistent Socialist party has formally pledged to return the retirement age to 60, should it win the 2012 presidential election.

Sarkozy is treading in muddy waters and he knows it. Hence the hardening of his traditionally tough stands on security issues. These are manifest smokescreens aimed at diverting the attention away from the pensions reform. First, we had the law banning the burqa in public places (it concerns less than 400 women in France) – which yesterday sailed almost unanimously through the French Senate – then the law stripping nationality from naturalised citizens who deliberately endanger the life of a police officer. Now, there is the targeting of the Roma population, which has been quasi-unanimously condemned in Europe.

Interestingly, these gimmicks and gesticulations have done little to boost Sarkozy’s approval ratings, which remain abnormally low (34% support his action against 62%). However, his popularity rating has increased by 20% among National Front voters. Yet again, Sarkozy proves a politician who thrives on a crisis (of his own making), and contemplates running a hardline campaign on law-and-order issues in 2012.

Eric Woerth, the pensions minister, has remained in office despite a conflict of interest linked to Liliane Bettencourt, the billionaire heiress of L’Oréal cosmetics empire. This affair touches alleged illegal financing of Sarkozy’s UMP party and alleged tax evasion while Woerth was budget minister and leading a clampdown on tax evasion. Only the rich get richer in Sarkozy’s France. The trouble for the incumbent president is that the French have noticed it.

PHILIPPE MARLIÈRE is professor of French and European politics at University College, London (UK). He is a regular contributor to The Guardian, Le Monde and Le Monde Diplomatique. He can be reached at p.marliere@ucl.ac.uk.

More articles by:

Philippe Marlière is a Professor of French and European Politics at University College London (UK). Twitter: @PhMarliere

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