A Retirement Reform Disconnected from Contemporary Issues

A Retirement Reform Disconnected from Contemporary Issues

Apr 6, 2023, 3:37:21 PM UTC
Debate on pension reform in France highlights the need for a system reform taking into account all challenges of today's society.
Protests against the pension reform in Paris. March 2023.
The debate on pension reform in France highlights that dialogue is extremely important and that a systemic reform that takes into account all challenges of today’s society is much needed.

The French government's decision to bypass Parliament in relation to the retirement reform by invoking articles 47-1, 44.3, and 49.3 of the Constitution has sparked outrage in a context where a large majority of French people reject the reform.  A careful consultation process involving all stakeholders could have avoided the outrage, if the necessary pension reform was seen in light of the fundamental issues faced by France, Europe and the world at large together. A systemic reform resulting in a fair and sustainable pension system is part of the solution to addressing these issues. And now is not the time to look away. 

Unfortunately , the current pension reform is purely financial. It does not lay the foundations for a social compromise fit for today’s world. It does not purport to address climate change, our changing demography, migration, the digital transition or inequality - issues that concern each of our fellow citizens and will inevitably have an effect on our work life. Putting these issues at the heart of the dialogue with unions may have helped hold all stakeholders accountable and open the way to a compromise. 

The recently released 6th IPCC report warns us again that global warming is rapidly increasing. Climate change will cause many issues relating to our work force that France and the rest of the world need to prepare for. We can expect, for example, more heatwaves and storms that could worsen life expectancy rates, hotter temperatures that could make some types of work harder and an increased rate of displaced people. The increased risk of natural disasters will also weigh on the insurance and finance sectors, putting pressure on pension funds on which many retirees depend. This argues for strengthening our pay-as-you-go pension system. Finally, when successfully implemented, the ecological transition will have a great impact on employment, forcing entire sectors to evolve  and causing multiple professional reconversions. It is better to prepare now by implementing systemic changes to our society, including the pension system, rather than waiting until it is too late. 

Demography is another issue that needs to be factored in. Even though the French birth rate is the highest in Europe, the French population is ageing. Concretely, this means that by 2050, France could be in dire need of  up to 3.9 million workers, and the number of elderly people whose retirement will need to be financed will be higher than ever. As promoted by the French government, this could therefore threaten our pay-as-you-go system, if no action is taken. Therefore increasing the retirement age should be one element of a more comprehensive solution. Another aspect of the solution, currently not put forward by the French government, would be to promote immigration, as it is necessary to offset the reduction in the workforce in France and Europe. Making France more welcoming to foreign workers would be more effective in stabilising our pension system, and it would address the migration challenges of today's world.

Furthermore, in terms of the digital transition, the enthusiasm for artificial intelligence (AI) generating texts and images is likely just a taste of the transformations we will witness in the workplace. The digital sector could potentially bring productivity gains that could pave the way for new reductions in working time, such as the four-day week. However, we must not hesitate to regulate and tax these sectors, as China does. A systemic overhaul of the pension system should take these issues into account. 

Last but not least, the pension reform falls short of addressing the unequal system that France now has (even though "equality" is the second word in France’s motto). Whether it's about gender inequalities or questions of hardship, the pension reform does not provide a satisfactory solution for long or interrupted careers. Inequality between men and women was precisely one of the main issues addressed during the negotiation of the pension reform in Spain, which was met with a better level of social support.

This article only raises a few aspects of the fundamental issues that could be addressed in the pension reform. How do we propose to get there? Volt defines solutions through consultation and by relying on Europe to overcome the short-term vision that too often characterises national policies. A lot of the issues raised can be addressed in cooperation with the EU. For example, the EU plays a pivotal role in mobilising the investments required by climate, ageing population, and health issues. It is also at the European level that we can create an attractive market to attract workers from around the World. Moreover, the EU can play an essential role in introducing and promoting new regulations regarding the digital transition.

The ageing population and the increase in precariousness among young and elderly people are challenges that France shares with most European countries. If we look at our European neighbours, we can find inspiration as well. Several of them (such as Sweden in the late 1990s) have successfully reformed their pension systems with a high level of consensus by making space for dialogue with all political actors. 

We therefore propose to commit to a consultation for a systemic reform of our pension system. This consultation would first launch a panel bringing together French and European citizens as well as foreign workers, and this panel would be followed by structured social dialogue with professional organisations. The consultation would make proposals for a sustainable, fair, and individualised management of retirements in France and for common solidarity mechanisms across Europe. 

The challenges we face have no borders, and we can only solve them together.

This article was authored by Ulysse Gounelle, Alexandre Bisquerra and Clara Panella-Gomez.

Photo credits: Roland Godefroy, CC BY-SA 4.0, via Wikimedia Commons