A strike for pension reform

Former French Prime Minister Michel Rocard once quipped that “pension reform has the potential to bring down several governments” (avec la réforme des retraites, il y a de quoi faire sauter plusieurs gouvernements). On Thursday of this week, France will suffer once again what promises to be a more or less total shutdown of public transport in the Paris area, a very limited number of mainline trains in the rest of the country and union sponsored street marches, probably accompanied by masked and helmeted hooligans hiding behind them. Many people who remember the three week long public transport strikes of 1995 are openly wondering whether the current President and his government will suffer the same fate as President Jacques Chirac and Prime Minister Alain Juppé, who were eventually forced to retreat ignominiously and withdraw the pension reform that they had proposed. In 2019, Emmanuel Macron’s chances of bringing his five-year term to a successful close by introducing a reform that has been fiercely resisted every time it has been attempted, hinge on the outcome of this show of force. Be that as it may, it is such repeated failures to bring about fundamental structural reform that have earned France a reputation among foreigners for being ungovernable.

The terms of the current conflict are deceptively simple. Back in 2016, when Emmanuel Macron announced that he was standing for President in 2017, he declared that one of his main policy ambitions was to reform the French pension system, turning it into a “universal scheme” in which every contribution would give rise to the same pension entitlement, regardless of whether one worked in the private or public sector or was self-employed. The simple message was that “1 euro of contribution would give the same entitlement to every pensioner”. Nothing was said at the time about raising the retirement age or increasing contributions or the dire and converging forecasts about future deficits, but it is worth noting that the French pension system as a whole absorbs more than 14% of GDP, quite a lot more than in other comparable countries. Much of it comes out of the state budget.

In contrast to the proposed reforms put forward by Alain Juppé’s government in 1995, for which there was hardly any prior consultation with those most directly concerned, there is no doubt that this time the government has fallen over itself to consult as many parties as possible and public debate has been vigorous and encouraged. However, as these consultations have proceeded, under the guidance of the avuncular Pensions Minister, Jean-Paul Delevoye, what looked like a simple solution has turned out to be a lot more complicated and the attempt to merge 42 individual pension schemes into one has hit many obstacles. For a start, to whom should the reformed system apply? To those who are 5, 10 or 15 years from retirement? Or only to those entering the workforce after the reform is adopted, a situation that would be tantamount to no reform at all for the next 40 years or so? What about the pension schemes that have managed themselves quite happily for many years, whose demographic characteristics are favourable and who are likely, under the proposed reform, to lose control over the reserves thy have built up? Is it fair that metro and bus drivers in Paris should be able to retire almost ten years earlier than their colleagues in other large French cities? Is it true that their working conditions are so much worse than those of nurses and doctors, whose jobs can be considered just as demanding and essential for society but who have no particular pension privileges? And on top of the proposals for a systemic reform, other more short-term but constantly recurring questions have also been raised: should the retirement age be raised for all, contributions increased, or existing pension entitlements reduced?  In the face of the number and complexity of such issues and the very different possible outcomes, the government had been criticised for not making its intentions clear, and by the more suspicious in nature (a large majority of French citizens!) for having a hidden agenda! But when all is said and done, the point has now been reached at which it is clear that the crux of the current reform effort is the reshaping of pensions in the public sector and particularly in big public transport companies like the SNCF and the Paris based RATP. And once again, the majority of unions in these and other public sectors have made it clear that they are prepared to bring the country to a standstill to stop the reform. Listening to a union representative on the radio this morning describing what he characterised as appalling working conditions in the Paris metro, I was left wondering why he and so many of his colleagues had not already left their jobs to look for something more congenial. But rightly or wrongly, their determination seems as strong as ever. In this respect at least, nothing has changed since 1995.

And in this conflict, as in so many others between the government and the unions, it is the evolving state of public opinion that will ultimately determine the outcome. For the moment, the attitudes of men and women in the street are inconsistent and contradictory. Some polls indicate that a majority is in favour of a straightforward, one-size-fits-all pension system, but other polls have found that many also have sympathy with those who are presented as, or loudly proclaim themselves as, losers in the process of simplification.  Now that the strike has been called and is likely to be massively observed, any objective assessment of the “facts”, difficult at the best of times, will take second place to a battle of soundbites and images against the background of all too familiar scenes of demonstrations and paralysis. In 1995, one of the reasons the strikers won the day was that Chirac was perceived, correctly as it turned out, as a half-hearted reformer. Macron is of a very different mettle. It is too early to tell whether Michel Rocard’s prediction will once again turn out to be true or whether Emmanuel Macron is the President who will at last break the curse of fundamental structural reform in France and succeed where many others have failed.