France’s pension reform compromise: The light at the end of the metro tunnel?

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French Prime Minister Edouard Philippe on Saturday made what appeared to be a major concession in his government’s showdown with unions over pension reform, retracting the bill’s most controversial measure – the so-called pivot age. But Philippe’s backtrack is only provisional. It depends on unions sorting out another way to save the system money, lest the reform wind up right back where it started.

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To hear the French government tell it, more than five weeks into record strike action against a polemical pension revamp, the powers that be finally reached a compromise with unions over the weekend.

The planned reform, which featured in Emmanuel Macron’s 2017 presidential campaign platform, aims to streamline France’s tentacular pension system, replacing 42 sector-specific pension schemes into a single points-based model.

In an effort to put the system on a sounder financial footing, Philippe in December introduced what he called a pivot age – raising the age at which retirees can collect a full pension by two years, to 64, while maintaining a legal retirement age of 62.

Retiring before 64 would remain possible, but with a penalty, while retiring later would mean a bonus – all in an effort to encourage workers to stay on the job, and pay into the system, for longer. The plan alarmed unions, with even the traditionally reform-minded CFDT saying it “crossed a red line”.

Pulling the pivot age off the table, at least for now, is supposed, in the government’s estimation, to be the olive branch that defuses the protracted conflict.

The CFDT and Unsa – the unions in favour of transitioning to a points-based pension system – applauded Philippe’s gesture, perceiving in it “a spirit of compromise on the government’s part”.

But the collective of unions (CGT, FO, CFE-CGC, FSU, Solidaires) who want the reform withdrawn altogether weren’t swayed. They still want the whole overhaul scrapped.

Indeed, there is every chance the dreaded pivot age will reappear in the reform bill down the line. The letter Philippe sent to the unions is clear on the matter, stating there will surely be an age of equilibrium – the pivot age by another name – in the future system. The prime minister’s missive also asked unions to propose “measures allowing [the system] to reach financial equilibrium by 2027” without “diminishing pensions” or “increasing the cost of labour”.

Disappear, reappear?

“If an agreement cannot be reached, the government, enlightened by the efforts of the conference [the discussions on pension-system equilibrium and financing due to deliver their conclusions by the end of April], will by order take the measures necessary to attain equilibrium by 2027,” Philippe explained. “I want be perfectly clear on this point: I will shoulder my responsibilities,” he wrote.

Stéphane Sirot, a historian at Cergy-Pontoise University outside Paris and a specialist in unionism and social conflict, thinks the pivot age is not quite off the table. “When you read the prime minister’s letter, you can see that the discussions the unions are being offered are very restrictive and it is hard to see how that will not translate into, at least partially, a pivot-age formula,” Sirot told France 24.

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The unions opposed to the system-wide pension reform agree. The CGT and others deemed the prime minister’s announcement “smoke and mirrors”.

“It’s a provisional withdrawal, so that means it will be put back in,” François Hommeril, president of the CFE-CGC (a union representing middle managers), told France 24. “The script so far is unfolding just as planned: Those who were frightened are today making believe they’re thrilled even though the unions are being asked to provide solutions without being given any leeway.”

Déjà vu?

For some observers, it looks a lot like history repeating. In September 2018, in the run-up to this government’s unemployment-insurance reform, labour and employers’ unions were told to get on the same page about new rules for that system, with the government setting for them the objective of achieving €3 billion in savings.

Each side agreed to take part in the unemployment-insurance reform negotiations then, even though some of those involved conceded from the start behind the scenes that the calculus was nearly impossible.

A few months later, unsurprisingly, the effort had proven futile. The State ultimately took charge of the unemployment insurance system for the first time since 1982 and it changed the system’s rules, tightening eligibility requirements and payout conditions.

“Rather than letting the labour and employers’ unions conduct their discussions together, they are given a series of constraints that make any agreement impossible,” Sirot notes. “As soon as you assign an impossible mission to negotiators, it can only result in failure. It’s a very typical way for political powers in France to conceive of social dialogue: We set the objectives, we cut off a certain number of possible paths to attain them and it’s up to you to sort yourselves out. But, in order to talk about compromise, what is needed are negotiations in which all of the possibilities remain open.”

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So for opponents of the current pension reform, it’s a foregone conclusion. Everything will go according to the script described by Philippe in his letter: The government will take back the reins in April, via orders, after noting negotiations between labour and employer unions have failed.

And as the critics see it, this script is even worse than the last one.

“What the prime minister told us is that the pivot age, which was meant to be submitted to the [lower-house] National Assembly for discussion, will in the end be introduced by order,” notes Hommeril, of the CFE-CGC union. “So what some interpret as a positive thing is in truth something even more negative.”

The initial reform bill had provided for discussions between labour and employer unions until September 2020 as well as a debate in parliament on the matter. Saturday’s announcement, on the other hand, shortens the discussions to three months and deprives upper- and lower-house lawmakers of having their say.

This article has been adapted from the original in French.

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