NewsmakersDecember 6, 2019

French President’s Pension Proposal Prompts Nationwide Strikes

Macron’s controversial strategy to stabilize the retirement plans' finances threatens to paralyze the economy.

Reported by Steffan Navedo-Perez

French President Emmanuel Macron’s plans for the country to adhere to a universal points-based pension system are provoking nationwide protests threatening to paralyze the country’s economy.

Macron’s proposal is to coordinate the country’s 42 distinct pension schemes into a unified points-based system that would reward employees for each day of labor, and those points would later be transferred into pension benefits when they retire.

His plan also aims to encourage employees to retire after the country’s official retirement age of 62, which is actually one of the lowest thresholds in the Organization for Economic Co-operation and Development (OECD) countries. To do this, the new system would lessen the benefits received by an individual if they retire before the age of 64. Those who leave the labor force after 64, would receive a benefits boost.

The current system, which includes unique provisions for certain professions, is under criticism for being complex and costly, and demands spending of about 14% of the country’s economic output, which is amongst the highest rates in the world. Only Greece and Italy top it in OECD countries, spending about 17% and 16%, respectively.

It currently provides pension benefits based on a worker’s 25 highest-earning years for labor in the private sector, and for the last six months of work in the public sector.

Under a new system, unions are worried they will lose their say on pension benefits and contributions under a unified system, and they prefer the status quo because the current system makes up for the disparity between incomes and payments.

About seven out of10 French people say they will back the strike, threatening to pause many of the city’s critical operations for several days or more. Nurses and hospital staff, transportation operators, lawyers, police officers, postal workers, and energy staff are amongst those pledging to participate in the strike. Some trade unions asserted they will continue the strike until Macron abandons the proposal.

About 82% of drivers said they will go on strike, and at least 90% of regional trains will be cancelled. About half of the scheduled Eurostar trips between Paris and London have been cancelled. In Paris, 11 out of 16 metro lines will shut down completely.