The French retirement revolt

Some people actually even admit that they tend to avoid crossing over to the other bank unless they are obliged to do so. This is true not just for the odd Parisian but also for some of the people who live in the provinces where the "high" and "low" region inhabitants tend to stand their ground. The notions of right and left, high and low, are so imbedded in French culture that whatever the subject of conversation, in polite society, it is a generally accepted principle that political and social opinions should never be expressed in public.

Not only are the French just as intelligent as Australians, British, Americans, or other Europeans, but they are also as well informed and as reasonable as the rest of us. They know full well that the country's age pyramid is shrinking at the base and expanding at the summit and that the American financial epidemic has infested its economy as it has that of all the other European countries. They know that their national retirement fund has already accumulated a debt of about €32 billion in 2010 which will increase to €80 billion by 2030.

They know that reform is both necessary and urgent if the country is to avoid being down-graded by the international rating agencies, resulting in the loss of its current favourable international credit facilities. They are equally conscious of the negative effect this would have on the economy, particularly on unemployment which, for the fifth largest economy in the world, is already standing at an unacceptable high of 10.1% (as of March 2010).

There is indisputably an overwhelming majority in favour of reforming the national retirement scheme. The revolt is not against reform. It is against what the French consider to be the refusal of the Sarkozy government to engage in genuine negotiations with the unions. They also disapprove of the manner in which the government has short-circuited the opposition in parliament in order to avoid public debate on what they consider to be a major national issue. Some of them are even calling for a referendum.

Under the current scheme, retirement benefits are subject to a double trigger mechanism: a minimum retirement age of 60 years and 40.5 years of contributions to the fund. This double-barrelled shotgun produces a current average retirement age of 61.5 years, not 60 years as the international media would have us believe.

If the second trigger has not been fired by age 65, benefits are granted without penalty.

The government's reform bill increases the first trigger progressively to age 62. The second trigger increases progressively to 41.5 years.

If the second trigger is not fired by age 67, again, benefits are granted without penalty.

A new feature introduced by the reform is the recognition of incapacity. For anyone suffering a minimum incapacity of 20%, the first trigger is maintained at age 60.

The unions point out that France has one of the highest unemployment rates in Europe both for the 55 to 64 year olds and for young people seeking their first employment following completion of their studies. They warn that the government's reform bill can only aggravate the situation. They estimate that it will mechanically increase the effective retirement age for a large number of employees, particularly those having suffered a broken career due to periods of unemployment, to a much higher age bracket of 65 to 67 years, thus putting off for a further three to four years the age at which young people will have room to enter the work market.

The socialist opposition party has officially declared it will roll back the first trigger to 60 years if its presidential candidate is elected to power in 2012. It has detailed an alternative reform project to finance the maintenance of the existing 60 year retirement age limit through fiscal reform including increased contributions from the financial sector, taxes on bonuses and stock options and revenue on capital, all of which the Sarkozy government's liberal and conservative electorate firmly rejects.

In the meantime, as foreseen in the shrewd timing of president Sarkozy's strategic implementation plan for the reform, the revolt has taken a two week pause to celebrate the Catholic feast of All Saints. It remains to be seen if the revolt will have lost impetus due to the break or if, on the contrary, it will have gathered strength.

It is reassuring to recall that the guillotine went into forced retirement when the socialist president, François Mitterand, abolished the death penalty in France in 1981.