STUMP » Articles » French Pension Protests: Macron Flubs by Trying to Force Change » 29 December 2019, 19:48

Where Stu & MP spout off about everything.

French Pension Protests: Macron Flubs by Trying to Force Change  

by

29 December 2019, 19:48

Various public employees (and other employees) are protesting in France over changes to the pension system, so let us see what the facts are, and the heart of the dispute.

Here is some general news coverage of the protests:

Okay, I could really lard it up, but let’s look at that last one [as it’s the most recent of all the ones I linked]:

Emmanuel Macron will be forced to speak out on France’s ongoing pensions strike in his televised new year address on Tuesday as transport stoppages look likely to continue into a fifth week, causing major disruption over the holiday period and into January.

The centrist French president, who made overhauling the country’s pensions system a key election pledge, has until now refrained from intervening personally, leaving his prime minister, Edouard Philippe, to deal with the day-to-day response to the crisis.

But, as slogans among leftwing demonstrators at a street protest in Paris this weekend read: “Macron, your silence is killing us,” Elysée officials told French media that Macron’s televised speech on 31 December would aim to calm tensions. He is likely to express sympathy for the many people whose travel plans have been disrupted, acknowledge the constitutional right to strike and call for dialogue.

The reason I’m highlighting this will become clear.

I look forward to what Macron has to say. And I need to get this out before he speaks… so here goes.

[yeah, I’ve had a version of this in draft for a couple weeks now, but it seemed like the protests would continue and Macron would pretend it wasn’t happening…but given he’ll be talking on Tuesday about this, I had better do a before… and then an after]

MACRON’S PROPOSAL

Here’s a piece on the changes Macron is trying to make:

WHAT DOES MACRON’S PENSION REFORM AIM TO DO?

Macron wants to set up a single points-based pension system in which each day worked earns points for a worker’s future pension benefits.

That would mark a big break from the existing set-up with 42 different sector-specific pension schemes, each with different levels of contributions and benefits.

Currently pension benefits are based on a worker’s 25 highest earning years in the private sector and the last six months in the public sector.

The president says that a points-based system would be fairer and simpler. It would also put pension funding on a sounder footing as the population ages.

At 14% of economic output, French spending on public pensions is among the highest in the world. An independent pension committee forecast the system would run a deficit of more than 17 billion euros, 0.7% of GDP, by 2025 if nothing is done.

I will get back to the points issue — it may be too complicated for people to really understand, or trust.

But there are some very concrete aspects, such as retirement age:

WHAT ABOUT THE RETIREMENT AGE?

Polls show the French are deeply attached to keeping the official retirement age at 62, which is among the lowest in OECD countries. Public workers who do arduous or dangerous jobs, such as mariners, can leave years earlier.

Macron says the French are going to have to work longer, but is shying away from simply raising the retirement age.

One idea is to keep the 62-year limit, but rein in benefits for those who leave the labor force before 64 and give a benefits boost to those who leave afterwards.

However, the president has indicated he would prefer to focus on the duration of a worker’s career rather than the age at which they stop working.

Soooooo, there are a couple issues here.

In the U.S., we have a minimum retirement age of 62 for Social Security, we have a “full retirement age” that differs based on your birth year (for me, it’s 67), and we also allow for benefits to go up past whatever your full retirement age is.

Retirement age means a lot of different things. In the U.S., we think of the age we’re allowed to retire (and get benefits) — that can differ (and does differ) by system. As mentioned above, Social Security eligibility age is 62. But it can be lower for public pensions or even for private pensions (with payment reductions). In some countries (and jobs), retirement age means the age you’re required to retire. Many places, retirement age is a cliff — both the age of eligibility and the age of required retirement.

But to push back at Macron, it absolutely matters the age at which one retires. To be nasty about it, people are expecting to get paid for the rest of their lives, and the earlier they’re expecting to get paid, the more they’re expecting to get paid in full. From an actuarial point of view, there is going to be a higher variation in the results when we try to do projections. Anyway, we would like you to retire at age 80, thank you very much.

But back to the point: for some public employees, these changes would be huge. For private employees, these changes might not be very large, but they would be confusing.

MEEP’S TAKE: LET PEOPLE MAKE CHOICES, EVEN IF YOU THINK IT STUPID

I’m going to take a position you may not be expecting from me, mainly because I don’t talk about political strategy/tactics or philosophy all that much.

If the French people are willing to take the consequences of continuing their pension system as-is, why not let them?

It’s one thing for a democratic government to build programs for people who really can’t make choices for their lives, but they shouldn’t be doing it for the entire populace. If you are positing that the entire voting population is cognitively impaired, you don’t really have a democracy (republican, parliamentary, or otherwise), do you? Might as well go back to some sort of official monarchy or real aristocracy.

(Mind you: if the people do have individual volition, said self-appointed aristocracy may find themselves re-enacting the French Revolution. I’m thinking that France is not going to go back to the pre-Revolutionary system.)

So stop treating the populace like a bunch of little children who need to have someone “better” make choices for them.

Let them make the choice, even if you think it stupid.

It’s one thing to say “Hey, it’s a small group, we can’t let them hijack the system over the wishes of the majority”.

It’s another thing to impose huge changes from above and then say “I’M DOING IT FOR YOUR OWN GOOD.” Especially if they don’t understand the changes you’re trying to make.

It’s clear that there would be massive changes for certain categories of employees, but the vast majority of private employees are having a difficult time understanding what these changes would mean for them. So they’d rather stick to what they already know.

Macron needs to put in the work to change minds. If he can’t change minds, well, tough shit.

He should go found a non-profit, and find a different project to do. Because he will likely make no lasting change. “The people” will dump his changes if he can’t make the sale, no matter how he pushes through legislation.

Part of the problem with many “elites” who have been trying the “impose solutions” strategy is that it takes away the responsibility from the electorate. People never learn the consequences of their choices if you never let them make a choice. (And then rub their noses in it, when the foreseeable results of their choices occur… though, watch out — they may not think those are bad results.)

I think it’s fair to be brutal in laying out the choices — but politicians need to be realistic in said brutality. Just as nobody actually died due to the death of Net Neutrality, and just as Brexit is not going to bring about a worldwide apocalypse, politicians need to be realistic in laying out the consequences.

Higher taxes, lower standard of living, and that sort of thing are foreseeable consequences. But perhaps the French people are just fine with that.

The remainder of this post is me looking at how likely it is that the French people, in general, oppose these changes. Just because some really loud people take to the streets does not mean they are generally supported.

POLITICAL LANDSCAPE OF FRANCE

This is not going to be very deep at all. I mean, feel free to tweet at me or email me (marypat.campbell@gmail.com) to let me know I’m wrong about something, but I am providing a very shallow analysis and letting you know.

First, is this change from Macron a surprise?

So let me go check — from March 2017 Macron takes aim at pension reform, lawmakers, in campaign manifesto

Presidential challenger Emmanuel Macron on Thursday [March 2, 2017] said he would root out inequalities in France’s pension system, sell government stakes in major firms and downsize parliament as he sought to silence critics who say his bid is thin on substance.

…..
Nevertheless, several of Macron’s own reforms will be controversial in a country of powerful interest groups, and which faces a feeble economic recovery and high unemployment which critics say he failed to tackle as economy minister.

…..

Macron, who last week outlined a broad economic plan mixing tax cuts, a reduction in government jobs and higher investments, said he wanted to smooth out big differences between the pensions of government employees and those in the private sector, while keeping the pension age at 62. Fillon would raise the pension age. Le Pen would cut it.

So voters can’t say they didn’t know he would eventually propose leveling government pensions so that they would be more like private sector pensions when they voted for him.

The results of that election was fairly solid, in the final round. However, Macron got only 24% of the vote in the first round. And about 5 million fewer people voted in the final round.

So one may say that the people weren’t really voting for the pension reform so much as voting against Marine le Pen. It’s like with Trump — many people didn’t vote for him so much as voted against Hillary Clinton.

So, like with Brexit and the recent UK parliamentary elections, it may be a good idea to go back to the people and make the vote more explicitly about the proposed pension reform.

However, it seems that the French system is not like the UK system, in which a parliamentary election can be held at any time. The French parliamentary elections are held every 5 years, so the next election will be 2022. Well, that gives everybody a couple of years to work out the details of the new system, if the people agree that a new system is needed.

PUBLIC EMPLOYEES IN FRANCE

Another thing is responding to Mish’s post on the situation:

Recommended Steps

1. National right-to-work laws
2. Abolishment of all prevailing wage laws
3. Ending public unions ability to strike
4. Ending collective bargaining by public unions

Points one and two need to both be in place before either is completely effective.

Note: I am against public employee unions:

This piece at the Hoover Institution reflects my attitude.

Mish’s 4 points are intended to apply to the U.S., but he started the post by talking about the French public employee unions and the protests, so let’s look at it in that light. [The main French protesters are public employees, as proposed changes would affect them the most.]

I don’t see those 4 points flying in France, at this moment in time. I could see it changing over time, but my point is — whether it’s Mish’s 4 points that would be even more unpopular than Macron’s pension proposal, or how Macron has set forth this proposal to begin with — imposing these policies that are disruptive and are not broadly popular is a great way to call forth political reaction and an undoing of those changes.

That’s the “problem” with representative democracy. If the people don’t like it, not only will they let you know, they will throw you out of office and go back to what they liked.

Because… I just looked up what percentage of the French workforce are government workers — almost 25% by one measure, and 28% by another.

That’s a wee bit high.

In contrast, the U.S. is at about 16% – 18%. (I think that’s too high, by which I mean we have too many government workers, not that the statistic is incorrect.)

The OECD average is about 21%. The highest of an OECD member is Norway at about 36%-38%.

When you have about a quarter of the workforce as government employees, you can see why a general strike by those workers is so disruptive.

But let us not be silly — it seems the general French public is on the side of the strikers. From Elizabeth Bauer’s piece on the French protests:

What’s more, despite the massive disruption of the strike, it has the support of a majority of the French, not just the public workers. According to ongoing Harris Interactive polling, 62% of those polled on December 16th supported the strikes opposing the pension reforms — down from the 69% on December 3rd just before the strike began, but a modest increase from the further drop to 59% on December 11th. To be sure, 69% of those responding supported a “Christmas truce,” but that doesn’t speak to their opinions on the objectives of the strikers/protesters.

Here’s some more polling data:

49% of those polled supported keeping the pension reforms as-is, or only changing them slightly; 51% want substantial changes or a complete cancellation — and these numbers are essentially unchanged since prior to the strike; the only movement has been a shift of 5 percentage points from supporting substantial changes to a complete cancellation.

65% of French people say they are worried rather than confident about the new universal plan; this breaks down into 64% of private-sector workers and 75% of public-sector workers. For what it’s worth, this is a modest improvement on pre-strike prior polling, where, on December 3rd, 70% of those polled expressed worry. (Partway into the strike, on December 11th, 63% said they were worried.)

At the same time, 62% responded “no” when asked if it was a “just” system (vs. 55% on December 11th), 62% said they disagreed that it would guarantee the future of the pension system (vs. 56% on December 11th), and 67% said it was not easily understandable (vs. 57% on December 11th).

Given the reports in the American media that this strike is about public-sector workers wanting to preserve cushy pensions with exceedingly early retirement ages, these levels of support are hard for Americans to comprehend. Suck it up, buttercup!

I do comprehend it: this is what the French people have chosen.

Why not let them have it, good and hard?

If they want to keep a living standard lower than Americans, that’s their choice. If they want to allow people to retire at absurdly low ages, for very modest sums, why not let them?

I know this is not the way of the Eurocracy, in which technocratic solutions are imposed on the populace, at which point the Eurocrats get annoyed that all sorts of unsavory characters get involved in politics and the Eurocrats are forced to stand down. How can the peasantry not understand that this is for their own good? How dare they push back!

OTHER PEOPLE’S COMMENTARY

A few excerpts.

Gaving Mortimer at The Spectator: France, not Britain, is the real angry and divided nation

Last winter it was the Yellow Vest protests that rattled the [French] government, and this year nationwide strikes against proposed pension reforms have ground France to a halt. For nearly three weeks the majority of the Paris transport network has been shut, and in recent days the far-left CGT (Confédération générale du travail) union has temporarily cut the power of hundreds of thousands of homes across the country.

More blackouts are promised by the union if the government doesn’t scrap its pension plans and in another sign of how radical the strikers are becoming, sports minister Roxana Maracineanu was recently forced to beat a hasty retreat from a football stadium after an angry mob shouted abuse and showered her with drink.

…..
Macron has two and a half years to heal the divisions, but optimism doesn’t abound in France that he will succeed. The country is depressed, in every sense of the word, and its people weary, cynical and rebellious.

In fact France is beginning to resemble the country that Michel Houellebecq depicted in his dystopian novel, Submission, a book that was scorned by the French intelligentsia when it was published in January 2015. They mocked the author’s bleak vision of a France on the cusp of a civil war in the lead up to the 2022 presidential election – but no one is laughing at Houellebecq now.

Pat Buchanan (he’s still around?): Today France, Tomorrow the USA?

Macron wants to raise to 64 the age of eligibility for full retirement benefits. Not terribly high. And to set an example, he is surrendering his lifetime pension that is to begin when he becomes an ex-president.

Yet, it is worth looking more closely at France because she appears to be at a place where the rest of Europe and America are headed.

In France, the government collects 46% of the GDP in taxes and spends 56% of GDP, the highest figures in the Western world.

And Paris appears to be bumping up against the limits of what democratic voters will tolerate in higher taxes, or reductions in benefits, from the postwar welfare states the West has created.

I don’t know that’s true, really. The French put up with a higher level of taxation than Americans.

(Still — Pat Buchanan is still around?)

Commentator from News Ghana: France Disrupted by Unions Striking Over Pension Reforms

The workers in France are taking up a key element in the struggle against capitalist austerity. As the gap between the ruling class and working people expands, there will be further efforts to seize control of larger amounts of the salaries, pensions and healthcare benefits of employees.

In the U.S. as well, the administration of President Donald Trump has suggested a proposal to reduce Social Security benefits. These plans on the part of capitalist governments must be opposed through general strikes, mass protests and campaigns to elect genuine socialists to public office.

Huh? Trump hasn’t proposed anything re: any pension systems whatever, forget about Social Security.

It is amusing to think the socialists can do a damn thing about demographic realities (people living to much older ages, in particular).

France 24: Why France’s ‘unsustainable’ pension system may well be sustainable

Live longer, work longer?

According to Le Bras, changing demographic trends challenge another of the government’s oft-quoted refrains: that workers who live longer must necessarily work longer.

He notes that the last “baby-boom” generations will be retiring by the mid-2030s, after which new retirees will be distinctly less numerous.

“More significantly, the increase in life expectancy may soon come to an end,” Le Bras adds, pointing to figures from France’s national statistics institute, INSEE.

While women’s life expectancy increased by 1.5 months on average each year between 1994 and 2011, the average yearly increase has since dropped to 0.3 months. Similarly, men have seen their progression slow down from 2.3 to 0.8 months.

Le Bras notes that COR’s calculations are based on more optimistic projections for life expectancy growth. But if the trends registered by INSEE are maintained, pensioners will live slightly shorter lives than stipulated in COR’s forecasts – and the system will generate a smaller bill to foot.

Um, what about new babies to pay for the old folks?

Cost-cutting?

Suspicions that the government is hell-bent on reducing the pension bill, thereby turning a “progressive” reform into a cost-cutting ploy, have alienated even erstwhile supporters of the reform.

In an op-ed published earlier this month, also by Le Monde, a group of prominent economists with close ties to President Emmanuel Macron called for greater “clarity” over the reform, arguing that “budgetary considerations” had cast a pall over its objectives.

While reiterating their support for a points-based retirement system, the economists urged the government to drop its plans for a “pivot age”. The reform should not “deteriorate the situation of civil servants,” particularly France’s poorly-paid teachers, they stressed, warning that “no category should lose out”.

But as things stand, a whole lot of categories stand to lose from the pension overhaul, warns Daniel Cohen, another economist who has previously been supportive of Macron’s reformist drive.

Lamenting a “huge waste”, Cohen told France Culture radio station that the government had achieved the very opposite of what the reform was intended for.

“Now that resources are sufficient, that they are stabilised in time, and that there is no systemic pension crisis in France, the main purpose of this reform was to ensure that pensions are no longer a source of anxiety for the vast majority of the people,” he argued. “Instead, the government has managed the tour de force of generating even more anxiety.”

Referring to recent policies that helped widen the pension deficit, Cohen added: “it’s a bit rich of the government to deprive our pension system of resources and then complain of a deficit.”

Wait, what? That logic doesn’t work at all.

The Nation: Don’t Mess With French Pensions

The bottom line is clear, though: French people are going to have to work longer, as Prime Minister Edouard Philippe has insisted. Why? The main reason is the budget. The French state spends more than nearly all of its fellow wealthy countries on its seniors: just under 14 percent of GDP, or double the US rate. For Macron’s government, this is unsustainable: The social security system, it says, could face a deficit of up to €17 billion by 2025, up from €5 billion this year.

Officials paint this as an inevitable result of an aging population, with the ratio of workers (who pay into the system) to retirees (who draw from it) decreasing—hence the urgent need for an overhaul.

This picture is misleading, though. The growing gap in the social security budget comes not from workers’ pension contributions, which are largely stable, but rather from a political decision to cut the state’s share of the budget. This, as always, is what the pension battle comes down to: not a question of whether there’s enough money, but how that money is distributed.

To this day, the French have accepted to pay a relatively high price for the right to a dignified retirement. As Cole Stangler has pointed out in The Guardian, France has one of the lowest rates of old-age poverty in the world: 3.5 percent, compared to 23 percent for the United States. This helps explain why in a poll published last Sunday, 64 percent said they didn’t trust Macron’s pension reform plans, even though more than three-quarters felt the system was in need of updating.

Again, if the French are fine with this state of affairs, it’s none of my business.

CODA: BALLET

And to finish this out, let’s check out what the ballerinas are doing in protest.

Ballet dancers took to the steps of the Opéra Garnier in Paris, to protest against French president Emmanuel Macon’s pension reform plans.

Ballerinas from the Paris Opera performed a piece from Swan Lake on Tuesday, in protest of the French government’s pension reform plan.

Twenty-seven ballet dancers took to the steps of the Opéra Garnier in Paris on Christmas Eve (24 December) to revolt against plans to scrap their special pension scheme, which currently allows them to retire at the age of 42.

…..
Hundreds of spectators watched as the dancers performed a piece from Tchaikovsky’s ballet. Behind the dancers, two banners read ‘Opera de Paris Greve’ (‘Paris Opera on strike’) and ‘La culture en danger’ (‘Culture in danger’).

Since 5 December, workers unions have been protesting against government’s plans to change the country’s retirement system.

Alexandre Carniato, a Paris Opera dancer, told France 24 (translated from French): “It’s daily work. It’s every day, every morning. And to get to that level, there’s a limit, a constraint.

“If you want to continue seeing pretty dancers on stage, they can’t go on until 64. It’s not possible.”

And here is a photo:

and a tweet with a video:

So here is my question: why is the government involved in the age at which ballerinas can retire? Are they government workers?

[maybe they are – it’s not clear to me]


Related Posts
Pennsylvania Pensions: Nibbling at the Edges
Public Pensions Watch: Sometimes Politicians Do the Right Thing
MoneyPalooza Monstrosity! The Positioning for Asking for State Government Bailouts
| Main |