France: a state of civil unrest
Over the Christmas holidays, I was lucky enough to visit Paris for the first time. Whilst the city itself lived up to all expectations, with the Arc De Triomphe and the Eiffel Tower in particular standing out as beautiful attractions, I couldn’t help but feel that our trip was slightly disrupted.
Industrial action in France began on 5th December, protesting against the broad changes to France’s pension system proposed by French President Emmanuel Macron. The strike shows little sign of stopping, with lawyers, teachers, hospital workers and others joining the protest this week. The French mandatory pension system, made up of 42 different regimes, consumes 14% of GDP, nearly twice the OECD average. To outsiders, the affluent French pension scheme is something to admire, as on average, French people receive 60% of pre-retirement earnings, compared with 49% in the OECD as a whole.
Following Macron’s campaign pledge, to adapt France for a “post-salary” era, ease mobility and protect people rather than jobs, he has vowed in his manifesto to merge the 42 regimes into a single-points based system, with the same rules for all. The controversy surrounding his policy stems from the introduction of a minimum monthly pension of €1,000, which sees those earning over €120,000 a year paying mandatory charges at a lower rte above that level, to finance pensions other than their own. On top of this, decreasing the maximum salary threshold from €29,000 (equivalent to U$$32,329 and £24,858) to €10,000 will decrease the income of the pension fund by 4.9 billion euros (equivalent to 5.5 billion dollars and 4.2 billion pounds) per year.
Supporters of Macron, such as the head of the employer’s federation, Geoffroy Roux de Bézieux call the new pension system “very distributive”, but the Confédération Générale du Travail reset the system accusing Macron of being “a president of the ultra-rich”. With such polarisation opinion, there is no surprise that Macron’s popularity rating has fluctuated significantly over his tenure, showing a steady decline from his initial election victory to around 30% at the start of the new year.
With Macron unwilling to back down, tensions are running high as France prepares itself for prolonged civil unrest. Will the protestors concede that relative to international standards, the French pension system affords them great wealth. Or will Macron, with the presidential elections looming ever closer, decide the time is right to abandon the policy initiative, and restore peace in the capital.
