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La sagesse est dans la rue” (Wisdom is in the street)

April 18, 2023

The Winter of Discontent was the phrase used to describe the violent industrial action in the UK in the late 1970s. History has repeated itself as the French took to the streets from January this year to protest against President Emmanuel Macron’s pension reforms. Sadly, more violence will follow as Europe heads into Spring.

The French pension system is based on the pay-as-you-go (PAYG) principle, and its financing is mainly ensured by contributions from workers and employers. It has been reformed several times to reflect shifts in the structure of the contributing and retired populations and changes in the economic environment.

From the 17th to the 20th century, pension plans were established for specific professional groups linked to the state.
Jean-Baptiste Colbert was a French statesman who served as First Minister of State from 1661 until his death in 1683 under the rule of King Louis XIV.

He was the Controller-General of Finances under Louis XIV and held almost all of the great offices of the state over the course of his career. Considered an accomplished manager, he was responsible for developing trade, industry, and the merchant navy, modernising Paris, and backing new advances in the sciences.

He also started the first pension system in France in 1673- it was a pay-as-you-go pension for sailors.

In 1853, Napoleon III generalised the distribution of pension scheme for all employees (civilian and military) to 60 years of age (55 years for harmful work) and created a survivor’s pension.

Fast forward to modern times, for the private sector and a large majority of civil servants, the most recent reforms include the increase of working years required for a full pension from 37.5 years to 40 years. Since 2010, the legal retirement age (i.e., the age at which pension benefits become available, albeit not in full) has been increasing gradually from 60 to 62 for those born after 1955. Moreover, the eligibility age for the social security pension, irrespective of contributing years, will be 67 years. However, those with harmful jobs are able to access a full pension from the age of 60 years.

According to a 2008 law, a later retirement (until age 70 years) is now allowed if the person is willing to work longer. Women gain two working years per child.

The French definitely don’t share Chartered’s view of working longer to improve a retirement outcome, and at least 1.1 million people protested on the streets of Paris and other French cities in January amid nationwide strikes against plans to raise the retirement age — but President Emmanuel Macron insisted he would press ahead with the proposed pension reforms.

In the early hours of 15 April 2023, Macron signed into law his government’s highly unpopular pension reforms, which raise the state pension age from 62 years to 64 years. It happened hours after France’s top constitutional body cleared the change. The Constitutional Council rejected opposition calls for a referendum – but it also struck out some aspects of the reforms, citing legal flaws.

Following the council’s ruling, protesters set fires across Paris, and 112 people were arrested. Twelve days of demonstrations have been held against the reforms since January.

Unions have vowed to continue opposing the reforms and called on workers across France to return to the streets on 1 May 2023. President Macron argues that the reforms are essential to prevent the pension system from collapsing. In March 2023, the government used a special constitutional power to force through the changes without a vote.

And we thought we had challenges with explaining and implementing the proposed two-pot retirement fund system in South Africa!

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