Could Pension Reform End Macron?

Pension reform is a long-time dream of the French right who dislike the amount France pays out in pensions and who see the system as unsustainable in the face of an ageing population. In 1993, the country’s Gaullist (France’s rightwing tradition established by Charles de Gaulle) prime minister Édouard Balladur increased the number of years of social security contribution required to receive the full pension from 37.5 years to 40 and changed the way they were factored into pension entitlement, reducing their value. In 2010, rightwing president Nicolas Sarkozy increased the retirement age from 60 to 62.

Then, in 2020, France’s current president Emmanuel Macron proposed a vast overhaul of the pension system. The move was generally understood to be an austerity measure and prompted the longest strike wave in France since 1968 which, in combination with the arrival of the Covid-19 pandemic, stopped the reform in its tracks. Now, with the pandemic and the 2022 election out of the way, Macron is attempting it again.

Despite unemployment sitting at 7.3% and stating in 2019 that “to raise the retirement age when we have not dealt with the problem of unemployment would be hypocritical”, Macron is ploughing ahead anyway: in January, his government unveiled a plan for widespread pension reform, including increasing tax contributions required for a state pension from 42 years to 43 (achieving this by 2027, rather than by François Hollande’s proposed 2035), and raising the retirement age from 62 to 64. The reforms are arguably make-or-break for Macron, who has staked his own reputation on the ability to pass them. Much like in 2020, however, his proposals have generated backlash so massive it could indeed break Macron’s presidency.

An expensive gamble.

The planned pension reforms have triggered the largest union action in a decade: two million people were on strike on 19 January, according to the General Confederation of Labour (CGT) union, just over one million according to the interior ministry. So far, their impact has been more political than economic: the most recent poll has 61% of the population supporting the strikes, while analysis by consultancy firm Asteres found that the strikes’ economic impact has so far been weak. Yet by the end of 2020, the strikes had cost France hundreds of millions of euros.

In October last year, the government ordered striking oil refinery workers back to work due to fuel shortages. With the same refineries committing to strike against the new reforms – on Tuesday, between 75% and 100% of refinery and depot workers at Totale Energies were on strike – the costs of this strike wave are likely to be significant.

Every attempt at pension reform generates large strikes in France. This time, however, there is a sense of optimism greater even than in 2020. This is in part due to a perceived “gilet-jaunisation” of the unions, who are seen to be more militant following the gilets jaunes (yellow vests) movement of 2018, who bypassed the unions to win concessions in the streets. It is also because, since June last year, Macron no longer holds a parliamentary majority.

‘The system is violent.’

Gaetan Gracea, 33, is a metalworker in the aeronautical industry. He went on strike with the CGT on 19 January. Speaking to Novara Media on the phone from the Toulouse factory where he works, he says that “the reform being proposed brutally attacks our retirement rights”. He adds that “even already, the system is violent […]. There are people who die a few months or a couple of years after they leave for retirement. So that’s why [we strike].”

Unlike metalworkers, state school teachers have a deal with the government, known as one of the regimes spéciaux (special regimes) – they receive a higher pension based on their final years in work in exchange for lower pay for most of their career – that Macron has promised to leave intact. Yohan Odivart, 40, is a history teacher and National Union of Secondary Education (SNES) union rep at a secondary school in Reims. He says that teachers will still be hit hard because the increase in the pension age, combined with the fact that teachers have to undergo further education (three-year bachelor’s plus two years of training), means that many will be elderly by the time they can draw their full pension.

On a call from his classroom, Odivart tells Novara Media that “we don’t have to [do manual labour], but controlling a class of 30 or 35 pupils, sometimes very young ones, is exhausting. Even if they are very nice […] it’s not even about teaching, it’s about the responsibility for the children. Honestly at 64, 65 or even in some extreme cases 68, I don’t think I will be able to do that work.”
Odivart says that many teachers have to quit before they reach full pensionable age: “Lots of teachers stop earlier and then get a decrease in their pension. What’s happening is we have lower wages our whole lives and then lower pensions in retirement, too.”

The Macron government insists that the pension reform is necessary because the current system is unsustainable: his labour minister Olivier Dussopt recently stated that the regimes spéciaux have become outdated because the nature of work has changed, making it unfair to give certain sectors special deals. For Charles Devellenes, a lecturer in political and social thought at the University of Kent and author of The Macron Regime, something else is at play: “The ultimate game plan,” he says, “is the creation of new markets.”

Big Pension.

Devellenes tells Novara Media that “because at the moment the pensions are generous, no one invests in secondary pensions […] capitalised pensions worth billions, that’s [Macron’s] dream.” France spends the third most on pensions as a proportion of GDP compared to the rest of the EU – however, its private pension funds are comparably small. According to the Organisation for Economic Co-operation and Development (OECD), as of 2020, France’s private pension fund assets totalled 2.6% of GDP; by comparison, the UK’s were valued at 118.5%, Denmark’s 58.4% and Spain’s 10.5%.

“Ultimately, who’s benefiting from this?” asks Devellenes. “Well, only the people who are wealthy enough to cash in on the pensions becoming capitalised [ie funded in part by pension funds making investments, rather than solely by direct employee contributions], which is a tiny proportion of the population – 10%, maybe.”

Odivart says that the government’s pension reforms are a false economy: “It’s a vicious circle. The money saved from pensions will go to social security because people will be sick and unhealthy. In a few years, they will tell us that we need more money for that system. So, we’ll need to work more and longer”. This fear partly explains why the resistance to the reform has been so fierce, with even the historically moderate unions such as the French Confederation of Democratic Labour (CFDT) joining the strike.

Gracea also suggests that “the brutality of the reform, in combination with the general context [of] inflation” has generated anger among people who are not normally so active. “Since Covid, people are no longer willing to accept being told to carry on no matter how hard it is, losing their lives to factories or difficult work.” He says that normally it is the younger people in the union who are most energised, but this time older workers are the readiest to fight back.

New faces.

In France, workers can go on strike with a union without being a member. Although union density is low – around 8% – the unions punch above their weight by being highly organised and attracting non-union workers to strikes; Odivart and Gracea both say that the strikes in Reims and Toulouse were much bigger than usual.
A street movement protesting the reforms outside of unions – largely directed by the NUPES coalition, the alliance of left-wing parties forged to contest the 2022 legislative elections – has also emerged.

Edouard Brunel is an organiser with the leftwing populist party and NUPES member La France Insoumise (LFI) in the deindustrialised northern city of Amiens. He tells Novara Media that at the most recent action, “what really struck me was that there were many new faces. People that you don’t see often. Not activists, not trade unionists. I met a lot of people who had never protested before.”
Antoine Dejour, 40, is a supporter of La France Insoumise and of the gilets jaunes. He tells Novara Media he protested in Nantes with NUPES because “I am convinced that the money to make the pension system viable exists, but it doesn’t have to be through contributing for longer.”

“Since the Covid crisis,” he adds, “the French super rich like [the world’s richest man] Bernard Arnault [CEO of luxury goods company LVMH Moët Hennessy Louis Vuitton, whose personal fortune Forbes estimates more than doubled to $150bn last year] and [investment company CEO] Vincent Bollore [whose estimated net worth is $9.6bn] have seen their wealth increase enormously. I think we should put our hands in their pockets”

Gilets jaunes 2.0?

Resistance to the reforms is continuing to escalate, with further strike days announced for February and the oil refineries threatening 48-hour and 72-hour strikes. If Macron were to U-turn over this issue, he would potentially have to call new legislative elections in what would be a humiliating blow. If the Republican party that has so far supported his reforms wavers, and he were to resort to article 49.3 of the constitution, which allows the president to bypass the parliament (and which he has used to an unprecedented degree since his re-election), he would lose use of this constitutional weapon for the rest of the parliamentary term. It would also risk the explosion of a movement similar to the gilets jaunes, which Macron is privately said to fear.

Many unions and workers seem ready for the fight. Odivart tells Novara Media that the day after the 19 January strike, his members began preparing immediately for the next on 31 January. But victory for the unions is not guaranteed. Their strength lies not only in their numbers but in their unity, and with more moderate unions like the CFDT united with more historically militant unions such as the CGT, the coalition may be difficult to sustain. For his part, Gracea worries that there is a lack of a “battle plan”, with the unions getting through each strike day before calling another without a long-term strategy.

If the moderate unions are persuaded to compromise, perhaps this historic strike will come to nothing. Devellenes says that he believes Macron could “make the movement much weaker by offering enough concessions to bring the moderate unions in line”. Odivart thinks this is unlikely in the short term because his union, the SNES, gained several new members from the moderate unions after they were perceived to have failed to stand up adequately to the reforms in 2019, putting pressure on these unions to act this time around.

Even if the coalition holds, Macron has shown himself capable of enduring a lengthy battle with social movements, so it may come down to who can accept greater economic damage: the striking workers who will feel it in their pay packets, or the president who will feel it in lost productivity and pressure from industry.

Odivart thinks victory “is possible for the same reason that we could lose. The fact is more and more people in France are getting desperate and cannot pay their bills at the end of the month. […]. At some point when you can’t pay your bills losing one and 15 days of pay is one and the same. So [we] will have to go all in”.