The pension reform has been criticised for being poorly prepared and poorly negotiated. So be it. However, repealing it would be very financially dangerous given the fragility of our public finances and the absolute need to redress them. Any sign of a worsening situation could trigger a serious French debt financing crisis. Therefore, the repeal of this reform would be understood by savers and the markets as irresponsible. Public pension spending on GDP will already represent 14.4% in 2022 compared to 11.9% in the eurozone.
But the repeal would also be very unfavourable for the French economically (for households or businesses) and ultimately for jobs and purchasing power. The only possible ways to ensure the balance of pay-as-you-go pension schemes are to lower the level of pensions, which is obviously good neither for retirees nor for the economy. To increase social contributions, through being paid by employees, thus causing a loss of purchasing power and downward pressure on demand. Or paid by businesses, knowing that these social contributions on GDP are already 50% higher in France than in Germany and 30% higher than in the euro zone on average, which ultimately amounts to less competitiveness, fewer jobs and downward pressure on wages. Finally, the third and final solution is to adjust the length of working life according to demographic changes.
Age measures (retirement age or, better, number of annuities) adjusted of course according to the arduousness of each person’s work, are the only ones capable of reconciling the interests of current or future retirees and the search for the best growth potential for the economy, employment and purchasing power. All the more so since even today many companies cannot grow as much as they could due to a lack of skilled or unskilled labor. A reminder: in France, we had 4 contributors for 1 retiree in 1960. In 2010, there were only 1.8 contributors for 1 retiree and it will be 1.2 in 2050. At the same time, in 1958, life expectancy at retirement age was 15.6 years for women and 12.5 years for men. In 2020, it is 26.9 years and 22.4 years respectively. While the retirement age is lower today than in 1958. Life expectancy in good health after retirement has also increased considerably. In France, only around 30% of people aged 60 to 64 work, while in other eurozone countries, almost 50% do so. 57% in Germany and 68% in Sweden! All neighbouring countries have indeed raised the retirement age (65 to 67 years) for the same reasons and out of realism. As a result, we must also finally wake up to the reality principle, so that our pay-as-you-go pension scheme is not endangered by the inability to finance it. This reform even if insufficient, is a step in the right direction. It is always possible to adjust it a little, but being careful not to open Pandora’s box…
Finally, two thoughts. First of all, work is not only economically necessary, it is also most often a means of integration, socialisation and self-fulfilment. Let us therefore facilitate the work of those over 60 and encourage companies to keep them, or even hire them. The second: work is not to be shared because it would be in finite quantity. It is a static and erroneous view of the economy that leads to thinking this way. Work creates work in a dynamic where supply and demand feed each other. All empirical results confirm this.