The French government is presenting new plans to update the pension system. Analysts expect some backlash from some workers.
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French president Emmanuel Macron is happening again: a new pension reform will be presented on Tuesday and is expected to face some backlash.
Macron is serving a second term as president of France but an overhaul of the pension system is a promise that has been around since he was first elected in 2017.
France’s legal retirement age is now 62 — lower than in many developed markets, including much of Europe and the US. The public sector also has “special schemes” or industry-specific arrangements that allow workers to retire before age 62.
End of 2019, Macron’s government has proposed a single points-based system, allowing a person to retire after they have achieved a certain number of points. The idea is the harmonization of rules between fields.
But the plan was met with uproar. Public sector workers – arguably the biggest losers from the potential reforms – protested for several days in several cities. The country’s biggest strike in decades. Amidst such strong opposition and Coronavirus pandemic, Macron decided in early 2020 to halt the plans.
This year will be one of pension reforms.
Emmanuel Macron
President of France
There has been some talk of revisiting the plans as early as 2022, but it was judged to be too close to the presidential election in April last year.
“This year will be the year of pension reform, aimed at balancing our system in the years and decades to come,” Macron said in his speech. New Year’s address.
“As I promised you, this year is really going to be the year of pension reform, to ensure the balance of our system in the years and decades to come.”
He added that he wanted to conclude negotiations in time so that the new rules would apply from the end of the summer of 2023.
“There will be turmoil, there will be strikes, [but Macron] decided to proceed quickly: the current procedure is supposed to last no more than 90 days,” Renaud Foucart, a senior lecturer in Economics at Lancaster University, told CNBC’s “Squawk Box Europe” on Wednesday morning. Three.
“It might be quick and dirty, but it’s more likely to pass than five years ago,” he added.
what to expect?
One of the main issues will be the new retirement age. Previously, Macron had suggested that this number could be raised from 62 to 65, but at a gradual pace with an increase of about four months per year until 2031.
French media have reported that the government is considering increasing the amount people on the lowest pensions receive in an effort to make the transition to a longer working life more acceptable to the public. CNBC was unable to independently verify this information.
Macron’s first proposal, from 2019, also envisages addressing so-called “special regimes”.
Any new changes to these agreements are likely to lead to backlash from affected industries.
France’s relatively low retirement age is a drag on its public finances. The country’s pensions advisory council has estimated a deficit in the pension system of around 10 billion euros ($10.73 billion) a year between 2022 and 2032.
