France to announce pension reforms, experts warn of public storm

By Al Mayadeen English
Source: Agencies
10 Jan 2023 11:35
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The reform plan will be unveiled at 5:30 (France time) today by the French Prime Minister.

Streets in France express outrage against Macron's economic policies, July 2021. (Bloomberg)

According to AFP, the French government is expected to unveil its plan for reforming the pension system on Tuesday, a proposal that might cause a political and social storm for the administration of President Emmanuel Macron.

French President Emmanuel Macron revealed the pension reform plan three years ago and has been fighting to implement it since.

The reform, which includes raising the retirement age in the country from 62 to 64 by 2031, will place Macron head-to-head with major trade unions that have threatened to take the fight against the plan to the streets.

President Macron, who considers that the country's citizens "need to work more," made his first attempt to pass the legislation in 2020, yet was faced with mass protests while coinciding with declaring the COVID-19 pandemic, which forced him then to back down.

The newly proposed pension system also slashes some benefits currently offered to workers in several sectors of the French economy.

"On the whole, the idea of the reform is not supported by the public, even though some can understand that if we live for longer then we might need to work for longer," Bruno Cautres, a political researcher and expert at Sciences Po university in Paris, stated to AFP.

France will see a wave of mass strikes in early 2023 if the government does not roll back its pension reform, Philippe Martinez, head of the General Confederation of Labour (CGT), France's leading trade union, warned last October.

At the time, France's largest trade unions such as CGT, Solidaires, and FSU made a press release announcing their rejection of the reform aim at raising the retirement age.

Earlier in September, around 250,000 protesters took to the streets to announce their opposition to raising the age of retirement and demanding an increase in the minimum wage.

"If Emmanuel Macron wants to make it the mother of reforms... for us it will be the mother of battles," warned Frederic Souillot, the head of the far-left FO union.

As concerns rise of massive popular protests similar to that of the "Yellow Vest", which previously forced Macron to perceive a less-authoritarian tone, Cautres told AFP that he didn't see "another 'Yellow Vest' crisis happening," despite having an overall street mood of "pessimism, fatalism and anger" with a sense that "we're permanently in crisis."

Last Saturday, France's protest movement, the Yellow Vests (Gilet Jaunes), mobilized on Saturday, to protest rising inflation and the government's plans to push forward pension reform.

Even though the reforms will probably cause public outrage, many officials in the French government consider the reform inevitable as several neighboring countries earlier increased the retirement age to 65 or even over that.

"There's a form of fatalism," an advisor to Macron said to AFP.

"We're going to go through with it and people know it," he told the news agency on the condition to remain anonymous.

Some of the previous proposals regarding the reforms have been toned down, such as the retirement age being set to 64 instead of 65.

A raise in minimum pensions to 1,200 euros a month is also among the new proposal, in addition to increasing payouts to individuals who have had work gap periods, such as parents who take career breaks to look after their children.

The government has also watered down some of its proposals, with the retirement age likely to be 64 instead of the 65 proposed by Macron.

Despite forecasts that France is heading toward a future problem of labor shortage due to its slowly aging population, critics consider the changes unneeded.

"In 2023, will Emmanuel Macron be out of step with the era and shine as the president of the rich?" French economist Thomas Piketty asked on Sunday in Le Monde newspaper.

Piketty argued that even though the changes will save the government nearly 20 billion euros yearly, 'these 20 billion will weigh down entirely on the poorest," by extending their working period.

Macron's reform challenges are not limited to the streets but also to the parliament, where the President's ruling party and their allies became a minority following the election setback last year.

The legislation is expected to require backing from the French Republican party in order to make it through.

Without their support, Prime Minister Elisabeth Borne will have to invoke article 49.3, which authorizes her to push out the bill without a vote.

In their march last Sunday, the Yellow Vest movement protested against the government’s repeated usage of “Article 49.3” which, in their opinion, cut short democratic, legislative debate in order to adopt the budget for 2023.

However, such an action would most probably result in a confidence vote, and if all opposition parties united, they could overthrow the government.

The French Prime Minister will reveal the proposed bill at 5:30 (France time) and will speak later in the day on French TV.

The war in Ukraine and Macron's inability to secure an overall majority in June legislative polls both add to the pressure as mass protests have been frequently hitting France in recent months to protest the cost of living, Macron's economic policies, and other social conditions.

Last December, the Bank of France predicted that the French economy will experience a sharp slowdown this winter, from which it will only gradually recover, casting further doubt on President Emmanuel Macron's government's economic optimism.

Weaker demand for French exports, higher inflation, and higher interest rates than previously anticipated mean the central bank expects growth to slow down to 0.3% in 2023, well below the 1% target set by the Finance Ministry. It stated that a recession cannot be ruled out, even if it would be brief and limited.

The outlook comes after the national statistics agency Insee determined that a sharp acceleration would be required during the second half of 2023 to achieve the 1% growth needed by the government to meet its budget deficit goal.