Macron’s Age Target Sacrifice May Allow Pension Plan to Pass

Alan Katz

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French President Emmanuel Macron’s strategic sacrifice, giving up an effort to make age 64 the baseline for full retirement benefits, could be the move that finally allows him to push through reforms that have bedeviled governments for a quarter-century.

After more than a month of strikes that have crippled public transport, a key early sign appears to be in his favor. Disruption to train services in France decreased on Monday as some union leaders tentatively embraced the new plan.

That may boost broader public support for the proposed reforms as some unions and employer representatives look to hash out alternate ways to ensure a balanced budget for the retirement system over the next three months.

Pensions are seen as the mother-of-all reforms in France and several previous governments have backed down in the face of public opposition to their attempts to change it. Macron’s government successfully barreled through changes to tax and labor laws with little effective opposition.

But the gridlock that forced the government to back down on one key measure shows how deeply the French are wedded to their pension system.

Macron aims to merge 42 separate regimes into a single universal points-based program that would, over time, save money and help balance the retirement system’s budget. A hot-button proposal was the now-abandoned effort to raise the age for full retirement benefits, the so-called pivot age, to 64 from 62.

“Everyone has moved, but balancing the budget, the principle of it and the means to get to it, that’s not negotiable,” Prime Minister Edouard Philippe said on France 2 television on Sunday.

In a letter to unions on Saturday, Philippe set out plans for a conference with stakeholders to hammer out how to finance the country’s creaking retirement system, in exchange for “provisionally” dropping the pivot age. He cautioned that if the sides fail to reach an agreement, the government will issue new rules by decree to bring financing of the system into balance by 2027.

Strike Support

Macron’s pension reform effort didn’t get off to an auspicious start. Because of the inclusion of the pivot age, the moderate CFDT union, France’s largest private sector labor group, lined up against the changes and participated in protests against them.

That allowed unions to frame the movement as on behalf of all working French. And it showed: throughout December, a majority of French supported the strikes, despite the inconvenience, according to a series of polls by Ifop.

While support dipped below 50% in January, the most recent survey on Jan. 9-10 showed it ticking back up. That’s when the government made its move, succeeding in convincing leaders of the CFDT and UNSA -- a union with significant membership among train and metro workers -- to abandon the strikes.

“The struggle goes on daily, but now is the time for dialogue,” Laurent Escure, head of the UNSA union, said on LCI television, calling the government move “an advance that allows for discussion.”

Laurent Berger, head of the CFDT union, said in an interview in the Journal du Dimanche that France needed to end the gridlock that was fatiguing its citizens.

It’s not clear, however, where the extra money needed will come from. In meetings on Friday, the government presented unions with documents showing that setting the pivot age at 64 would generate savings of 3 billion euros ($3.3 billion) in 2022 and 12 billion euros in 2027, according to Agence France-Presse.

The retirement age for most French workers is 62, while some categories such as rail and metro employees can stop work several years earlier. Finding the funds to replace those savings will be the subject of the conference, which will run until the end of April.

In the interim, other unions have pledged to continue strikes and protests.

“We’re calling for the movement to continue because nothing changed in the letter sent by the government,” Philippe Martinez, the head of the far-left CGT union, said on TF1 television late Saturday. “The debate over the pivot age is a decoy.”

Protests were already ebbing by the time the government made its offer. Nationwide, some 149,000 joined marches on Saturday, AFP reported, citing the interior ministry, down from 452,000 on Thursday and from 615,000 on Dec. 17.

Train and metro traffic is improving. Some 90% of high-speed trains are scheduled to run on Monday, French rail operator SNCF said in a statement on its website.

The CGT and seven other unions have called for new protests, particularly on January 16. Berger, the CFDT union head, said on RTL radio on Monday that his union wasn’t calling on its members to participate.

(Adds some unions calling for protests on Jan. 16 in last paragraph)

To contact the reporter on this story: Alan Katz in Paris at akatz5@bloomberg.net

To contact the editors responsible for this story: Alan Katz at akatz5@bloomberg.net, Ian Fisher

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