France’s Pension Reform Sparks Nationwide Protests and Political Turmoil

   The French, pension system has been facing financial instability due to early retirement and a rapidly aging population. To address this situation, the French government began promoting pension reform in November 2018. The existing pension system was complex, with 42 different job classifications, and the proposed reforms aimed to simplify the pension value, based on life expectancy and wage growth rate. However, the planned reforms faced significant opposition from the public, and a general strike of laborers, students, and other protesters wearing yellow vests took place. Nevertheless, President Macron presented his pension reform proposal, which included raising the legal retirement age to 64 and consolidating dispersed pensions into units.

▲ Photo of Protesters on 'May Day' (Photo from MBC News)

   The French pension system, which accounts for a significant portion of the country's GDP, at 13.6 percent, is facing an unavoidable structural demographic, an aging population, and an increase in life expectancy. Furthermore, more than 21 percent of the French population is over 65, and their retirement is exacerbating the problem. The French government has been trying to solve public budget deficits through continuous reforms, but they have not been able to make enough headway into solving the problems they face. The Macron government argues that the aging population and a decreasing workforce due to low birth rates will lead to tax revenue deficits that will only worsen over time. To establish a sustainable pension system, the government proposes extending the retirement age or the age at which individuals can start receiving pension benefits. If the reforms were to pass, starting this September, the minimum age for receiving a pension would be extended by three months each year until 2030. The global is the extend the retirement age by two years, from 62 to 64. The number of years working that are required to receive a full pension will increase from 42 years to 43 years in 2027. However, the government has also announced plans to raise the minimum pension ceiling from 75 percent to 85 percent of the minimum wage, which amounts to 1.68 million won per month. The changes are set to take effect in September of the year the retirement age is extended. However, the planned pension reform has faced strong opposition from French citizens of all generations. They believe that the pension system is crucial to ensuring individuals can retire with dignity, regardless of their profession or income. Protesters have emphasized the importance of protecting “French values” and criticized the government’s plan to upset the nation’s work-life balance. French people view the current pension system as a source of pride, allowing for a relaxed retirement, and do not accept the government's argument that it is out of step with the European average. Opponents of the pension reform plans argue that the rights of vulnerable workers in the labor market will be infringed upon by the proposed changes. Workers who lack sufficient educational opportunities and have had to enter the labor market early are at risk under the proposed plans, especially women who face significant work gaps due to childbirth and maternity leave. In addition, younger generations have also expressed concerns about the potential impact the pension reform will have on changing the labor market. They believe that the plans will make life more uncertain for them. Additionally, they questioned the effectiveness of pension reform and worried about how it will undermine social consensus.

▲ Protesters Out on the Street Wearing Yellow Vests (Photo from News 1)

   The proposed reforms triggered massive protests across the country. They began on January 19 with the country’s eight major unions and quickly spread across the nation. The scale of the protests has been truly remarkable, with millions of people taking to the streets to voice their opposition to the reforms. The strike paralyzed the mass transit and railway networks, leading to the closure of schools and hospitals. Moreover, administrative services such as passport, insurance, and vehicle registration have also been suspended due to the participation of civil union employees. The protests which were initially, peaceful, turned violent when the French government responded with riot police and tear gas. Even though the protest is disrupting France’s overall infrastructure, there has been a prevailing atmosphere of support, rather than complaints, about the inconveniences caused by the protest. The pension reform proposed by Macron has been controversial in France since 2019. However, the French President is strongly advocating for its adoption since he is under less political pressure because this is his final term in office. The government is pushing for the reform, but it is unlikely the bill will be passed due to a lack of support from the current opposition party. They suggest solving the pension problem by increasing the corporate tax burden instead of raising the retirement age.

   Professor Jeon Il-wook of Dankook University is skeptical about the effectiveness of Macron’s pension reforms. Calling the move advised, he said, “President Macron's pension reform approach does not address the fundamental issues in France, and it will require further reforms if French finances do not improve”. Professor Jeon suggested instead the government revive the wealth tax that was repealed by Macron earlier in his term in office to raise the shortfall in pension funds. When asked about the impact of the pension reform policies on female workers, he stated that low-income female workers could be more disadvantaged because they work longer and have fewer pension benefits when they reach old age. To address this issue, he suggested increasing the minimum pension benefit from €1,015 per month (75 percent of the minimum wage) to €1,200 per month (85 percent of the minimum wage) and providing pension bonuses to working mothers. Professor Jeon believes such measures would help alleviate the disadvantages working mothers face. When asked about the best way for the Macron government to deal with the current ongoing pension reform protest, he replied that French protests are expected to intensify starting on ‘May Day’, and that measures that can address their concerns should be proposed as soon as possible to avoid a heightening of clashes ahead of the national holiday. The main problem with the reform is that ordinary people are being forced to cover the losses incurred by French tax reforms. To solve this issue, he thinks the French government should consider revising how taxes are collected from the wealthy.

   Although Macron proposed reforms to the national program that were intended to address the plan’s deficit, strong public backlash makes it clear he should have made greater efforts to inform the people of his goals for the nation. Strikes and protests across the country must proceed in a humanitarian way. The violence associated with the protests only causes the situation to deteriorate. More needs to be done to regulate the atmosphere of these movements on behalf of both the public and the government. A consensus can be reached, but it will require a lot of ongoing negotiations and civil dialogue between the parties. Let us hope it is not already too late.