France, once again, is on the verge of chaos.
The subject of the discontent is the adoption of a law reforming the pension system in a minimal way: the legal retirement age in France has been set at 62 since 2010; the law raises it two years, to 64.
Neither members of the government nor economists on television dare to speak the truth: The French pension system is collapsing. The reform just adopted will not be enough to save it; just allow it to survive a bit longer.
The system has been bankrupt for years, but its bankruptcy is growing more costly.
The French pension system is not the only system collapsing. The country is facing a much larger crisis.
The French health insurance system, also based on mandatory contributions deducted from salaries, also is in terrible shape.
Food prices in 2022, meanwhile, increased 14.5%.
The center-left and center-right parties are dead. Neither the Rebellious France Party nor the National Rally Party would be able gather enough votes to constitute an alternative majority. The political situation is blocked.
France seems deadlocked, the possibilities of unblocking it nowhere in sight.
"A modest reform based on an implacable demographic observation has tipped France into an existential crisis in which everything is wavering... A much deeper malaise is rising to the surface. That of a country haunted by its decline". — Vincent Trémollet de Villers, Le Figaro, March 23, 2023.
"Have we hit rock bottom?" asked journalist Franz-Olivier Giesbert. "No, not yet."
Paris, France. March 23, 8 p.m. A demonstration took place; as usual now, riots followed the demonstration and swept through the center of the city, then to other cities. Cars were burned, shop windows smashed, garbage dumpsters set on fire. A garbage collectors' strike began two weeks earlier; nearly ten thousand tons of garbage, still strewn on the sidewalks, almost completely block some streets. The proliferation of rats threatens disease. Oil refineries are shut down; gas stations are running dry. More demonstrations took place March 28 -- and more riots.
France, once again, is on the verge of chaos.
The subject of the discontent is the adoption of a law reforming the pension system in a minimal way: the legal retirement age in France has been set at 62 since 2010; the law raises it two years, to 64.
As soon as the law was presented by the government, all the trade unions called for strikes. Philippe Martinez, general secretary of the General Confederation of Labour (CGT), a union with communist roots, said that a compromise with the authorities is "not an option". Leaders of the leftist railway workers' union, vowed to bring the French economy to its knees.
Jean-Luc Mélenchon, the leader of Rebellious France, the main left-wing party in France, told his followers: "Block everything you can". Members of the rightist National Rally were essentially on the same position as Rebellious France: a year ago, they campaigned for the retirement age to be set at 60.
Neither members of the government nor economists on television dare to speak the truth: The French pension system is collapsing. The reform just adopted will not be enough to save it; just allow it to survive a bit longer.
The system, created in 1945, is essentially a system of redistribution: mandatory contributions deducted from the salaries of today's employees are used to pay the pensions of today's retirees; today's employees rely on future contributions that will be deducted from the salaries of people employed at the time they retire. It seemed, when it was created, that the system could work: the ratio then was five employees per retiree. Life expectancy in France then was 65 years (68 for women, 63 for men). The retirement age was set at 60. On average, pensions had to be paid to retirees for only five years.
If, however, the ratio of employees per retiree decreased and life expectancy increased, the contributions paid by the employees would have to increase until reaching unbearable amounts. After the post-war baby boom, the number of children per woman fell, and the ratio of employees per retiree fell as well: today there are only 1.7 employees per retiree. Life expectancy in France has increased to nearly 82.5 years (85.3 for women, 79.4 for men). On average, pensions must be paid to retirees for more than 20 years.
The system has been bankrupt for years, but its bankruptcy is growing more costly.
The French government is in a situation where it had to "do something." Raising taxes to partially offset the deficit of the pension system is effectively impossible: France already has one of the highest tax burdens in the developed world (45.4 percent of GDP); at the same time, the country's economic competitiveness is crumbling.
French public expenditures are already the highest in the developed world and increasing. Increasing taxes would mean further crushing the taxpayers and indebting the country. Reducing public spending would imply cuts to welfare spending (a third of public spending), but a large part of the benefits paid go to immigrant and non-integrated populations in the "no-go zones." The cuts would trigger the risk of even more violent uprisings.
The budgets of successive French governments have been in deficit every year since 1970; the country's debt has reached alarming levels. The French debt to GDP ratio reached 100% in December 2019. It now stands at 113.7%.
The French pension system is not the only system collapsing. The country is facing a much larger crisis.
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Dr. Guy Millière, a professor at the University of Paris, is the author of 27 books on France and Europe.
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France, once again, is on the verge of chaos. The French pension system is not the only system collapsing. The country is facing a much larger crisis. Pictured: Rioters in Nantes, France, on March 28, 2023. (Photo by Sebastien Salom-Gomis/AFP via Getty Images)
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