French government begins to test the waters on pension reform

The French government has begun to test the waters for the most explosive reform it will undertake, by leaking key provisions of the Moreau report on pensions, which will be delivered to prime minister Jean-Marc Ayrault on Friday.

Right-wing governments reformed the pension system in 1993, 2003 and 2010, each time reducing the gap between public and private sector benefits.

No left-wing government has ever tackled the issue. On the contrary; in 1981, then prime minister Pierre Mauroy, who died on June 7th, lowered the retirement age to 60. What the left has given, the left is about to take away. At every opportunity, President François Hollande repeats that Nicolas Sarkozy's reform in 2010 – which raised the retirement age to 62 – left the dirty work undone; that if the system is not substantially overhauled, it will run €20 billion in annual deficits by the end of the decade.

Not only is France unable to pay for pensions at the present rate, the EU Commission made a full reform the sine qua non of the two-year reprieve granted to Paris to meet its 3 per cent budget deficit requirement.

Draft law
The Moreau report will be discussed at the June 20th-21st social conference, where the French social partners will state their positions. In August, when everyone is on holiday, the government will share the first version of its draft law with trade unions. The text will be presented to the cabinet a month later, and should become law by the end of the year.

Much could happen in the meantime to derail the process. Six trade unions have issued a communique saying they “will accept no further regression” in the pension code. They have promised to hold a “day of action” – general strike – by October at the latest.

By eating into public sector pensions, the socialist government risks alienating its core electorate. Two-thirds of public sector workers voted for Hollande last year. Force ouvrière (FO) is the leading trade union for government employees.

Its leader, Jean-Claude Mailly, predicts “anxiety” and “tension” over pensions in the coming months. There is “no difference,” he says, between Hollande’s plan to increase the number of years one is required to contribute to the pension system and the previous, right-wing government’s raising the legal age of retirement.

Early retirement
A former state employee receives a pension on average one-third higher than his equivalent in the private sector, at €1,932 per month as opposed to €1,281 per month. Train drivers can still retire at age 50; officers in the national police, prison wardens and air traffic controllers at 52. Customs agents, firemen, sewage workers, municipal police and nurses in public hospitals retire at 57.

At present, pensions are based on an employee’s 25 best-paid years in the private sector. In the public sector, one’s pension is based on salary during the last six months of work. Opinion polls show 75 per cent of French people believe the same method should be used for everyone – as suggested by the Moreau report.