On April 14, 2023, the French Constitutional Council announced that it had reviewed the government's pension reform bill and found most of it to be in compliance with the French Constitution. This gives French President Emmanuel Macron's pension reforms, which have been causing a stir across the country in recent months, a legitimate legitimacy. Macron signed the bill into law the next day, on Sept. 15, and announced that it would go into effect on Sept. 1. The reform has been met with resistance, with strikes and protests intensifying.
French pension reform system
The French pension system is a public pension system that is funded by taxation. The French pension system consists of three types of pensions: a general pension for private sector workers, a pension for the self-employed, and a special pension for public employees. In France, workers must be at least 62 years old to retire and receive a basic retirement pension. Under the current system, workers must complete a minimum number of years of retirement insurance in order to receive the full pension at age 62, which is the minimum age for receipt of the basic retirement pension, and then work for about five more years to receive the full pension. The institutional capacity of the French pension system, which is funded by a contributory system, can be assessed by its ability to achieve the three goals of intergenerational cohesion, equity, and sustainability. While France's existing pension system is considered to have achieved the first two goals, the outlook for sustainability is not as positive. In his pension reform, Macron raised the minimum age to receive a pension from 62 to 64 in an attempt to make it more sustainable, and it will be interesting to see if this is the right move to achieve all three goals.
Causes of French pension reform
First of all, there are basic structural reasons for the French pension reform. The pension system is vulnerable to demographic changes because future generations have to pay for the pensions of older generations. However, the number of pensioners is expected to increase while the number of contributors to pension funds is expected to decrease due to the aging and declining birthrate in developed countries around the world. The cost of elderly support in France is expected to increase further by 2040, and if this increase continues for more than 20 years, the French pension system will become a more complex and difficult problem to solve.
Another contributing factor to the French pension reform is the high proportion of French retirement pensions. According to OECD data from 2017, the average French retiree receives a pension of about 60% of their final salary, compared to 38% in Germany and 22% in the UK. Analyzing these facts, it's hard to see Macron's pension reform decision as a negative.
Political opposition
President Macron invoked Article 49(3) of the Constitution, which allows the government to act without a parliamentary vote on a pension reform bill that would raise the pension age. This constitutional provision is a special constitutional power that allows the government to bypass Parliament in times of emergency and has been criticized as an undemocratic constitutional provision that overrides parliamentary authority. Macron's decision to prioritize the bill was met with fierce opposition as he tried to convince the right-wing opposition Republicans, who are not friendly to pension reform, to pass the bill by a vote, but when the vote count showed that the bill would not pass the Senate, Macron decided to prioritize it. In response, opposition lawmakers filed a motion of no confidence in the cabinet to prevent Macron from proceeding with the bill, but the motion was rejected due to a lack of a majority vote, and the pension reform bill was given the same effect as if it had passed parliament.
Citizens' protests
Under the above circumstances, there have been a series of strikes and protests against pension reforms across France, as citizens have reacted strongly to Macron's implementation of Article 49, paragraph 3 of the Constitution. The workers' protests against pension reform on March 7th of this year were the largest in France since World War II, and the scale of these protests shows the enormous interest in pension reform among the French people. Many public transportation workers, truck drivers, and nuclear power plant technicians went on strike, as did two-thirds of primary school teachers and a quarter of civil servants. This has led to a one-fifth reduction in electricity production, forcing the country to import electricity from neighboring countries. The protests turned violent, especially after the government's announcement of Article 49.3, with police firing tear gas and stun grenades to disperse radicalized protesters.
What is particularly noteworthy about these protests is not only the sheer scale of the protests, but also the phenomenon of intergenerational solidarity. Generational conflicts are often seen in issues related to pensions, but in the French case, citizens of all ages are participating in the protests and expressing their opposition. The reason for this phenomenon is that the pension system is perceived as a generational solidarity in France, where the current working population supports the retired population and receives these benefits back in retirement, and serves as a cornerstone for a comfortable life in retirement. In addition, according to OECD data from 2017, the income replacement rate in France is around 60%, which is much higher than in Germany (38%) and the United Kingdom (22%), so French citizens have higher expectations of retirement than in other countries, and they tend to see pension reform as a reward and blessing for a lifetime of work, which makes them more sensitive to their right to a pension. However, while all generations share a common opposition to pension reform, they have different reasons for their opposition based on their own interests. The French working-age population was outraged that their comfortable retirement would be compromised by the fact that they would have to work longer to receive a pension, and young people were afraid that they would be the generation that sacrifices for the older generation and gets nothing in return, especially when it is difficult to find a job right now.
These pension reform issues are not unique to France, but are global, and South Korea, in particular, should be paying more attention to them and working to devise solutions, as its pension fund is set to run out of money faster than France's, and its aging population is growing. Despite the fact that the pension situation in Korea is more serious than in France, the level of interest in pension reform in Korea is much lower than in France. Therefore, while institutional reforms are essential, it seems that in order to find a fundamental solution for a sustainable future in an aging society, it is necessary to foster a mature sense of citizenship among the population.
Seoyoung Lee (2-4)¹ | Staff Reporter
1) seoyoung061013@gmail.com
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