New pension reforms in France have led to loud opposition with protests across France. The announcement encountered widespread criticism from left-wing parties and groups. The proposed reforms are Macron’s long-standing pledge to make France’s pension system more sustainable, similar to India’s NPS.
France expresses itself through representative assemblies. There are two of them, which constitute the French parliament. On February 6, the bill for pension reform of pensions was presented to the deputies. It is a type of reform quite common in France. This reform raises huge questions. Indeed it plans to push back the legal age of retirement from 62 to 64 years and to increase the number of people who will have to contribute 43 years for private sector employees. The civil service jobs keep their status. Moreover, this reform can be described as exceptional because it makes up for a rather edifying reality. France has a lot of trouble keeping old people at work. Let’s take a step back and see how this reform is the perfect example demonstrating the loss of power of France in front of the European Union of which it is a member.
France is a co-founder of the European Union. At the end of the wars, the military courts closed and the resumption of long-standing projects started. The creation of a real alliance between the countries of Europe with the aim of trading together and making Europe prosper is one among the many. This idea was supported by General de Gaulle, then president of France. That the European Economic Community was born. The countries composing this EEC are France, Germany, Italy, and the Benelux countries. The objective of this union is to establish economic cooperation between the countries. Subsequently, this “European Construction” was completed by treaties such as the Treaty of Maastricht in 1992. This treaty is defined as the founding treaty of the modern European Union as we know it. This new form of the European Union, which will succeed the EEC, also imposes a political agenda every 5 years, which must be respected under penalty.
In the European Union, a lot of countries have realized a pension reform that follows the prerogatives of the European Union. But the reform foreseen in the political agenda of the European Commission aims at harmonizing the practices in the Union. However, a very important fact has been overlooked: the uniqueness of the French pension model. In France, working people pay the pensions of people who are currently retired, or of those who will be. In some countries, in order to have money for retirement, you have to save or put your money in pension funds, the most obvious example being the United States.
Professor Anne Lavigne describes the pension system in the magazine “éconmie des retraites en France” as follows: “The French pension system is a complex mosaic, the result of a long accumulation of heterogeneous schemes. It is organized into compulsory basic schemes structured on an occupational basis, which confer different rights and obligations depending on the members to whom they are addressed.”
There are three main categories of schemes:
- The general social security scheme, which covers all private sector employees, affiliated with the Caisse nationale d’assurance vieillesse des travailleurs salariés (CNAVTS).
- In addition to this general scheme, there is the agricultural scheme managed by the Mutualité sociale agricole (MSA), since these two schemes provide the same benefits and are financially integrated. The general scheme is the most important one since it collects contributions from about 69% of the working population and pays pensions to more than 13 million retirees in 2011;
- The self-employed schemes: the social security scheme for the self-employed (RSI), which covers craftsmen, shopkeepers, and industrial managers, as well as the schemes managed by the National Old-Age Insurance Fund for the Self-Employed (CNAVPL), the scheme for farmers (managed by the MSA), the National Fund for the French Bar and the National Old-Age Insurance Fund for Religious Associations. The social scheme for self-employed workers is said to be “aligned” with the general scheme insofar as the rules for calculating contributions and benefits are essentially identical.
This description brings complete elements proving the uniqueness of the French model. The lively debates are driven by the political agenda of the European Commission. Which wishes a standardization of social policies in the different member states of the European Union. Moreover, it is obvious to understand the standard of living in a country like Bulgaria, which has its rather average level of development compared to a country like France.
The French authorities could put forward their place in the union in terms of budget and the place of France in the construction of Europe to support the uniqueness of its model. De facto defends the interests of its workers, its technicians, its engineers, and its PhD students. The debates in France explain that the country lacks doctoral students and engineers. Among a number of variables, the question of pensions comes into play. This model is in line with the innovative ideas of the Enlightenment period. The upheaval of the society, and the exit of the labour pains towards a more humanistic and universal society. By voting for this law, which is in progress, and by fearing economic sanctions from the European Union, France shows that it is hardly able to guarantee the integrity of its model.
Title image courtesy: The Good Life of France
Disclaimer: The views and opinions expressed by the author do not necessarily reflect the views of the Government of India and Defence Research and Studies