by Violaine Messager

France, home of strike? Europe is featured by strike as a frequent resort in Germany or Italy as we have seen recently. By now, the issue of retirement pension reform and the fragile and growing imbalance of the system of repartition in France makes the headlines.

A bit of history is needed to understand the underlying principles of this system: the 1945 born system of retirement pensions lies on the repartition principle, by which is meant solidarity from one generation to the previous one. The social advance idea paved the way to every reform of the system till the eighties when a new questioning was given birth to: the sustainability of the underlying social compact.

The two most frequently seen initials in the French newspapers are Agirc and Arrco. They refer respectively to the cadres pensions and the complementary pension schemes and the issues dealt with are not among the simplest ones: Another system, the alternative needs evocating: capitalisation.

No French Equivalent
There is cultural opposition as highlighted by the following analysis: The English expression “Pays-as-you-go” has no equivalent in French. French people use the technical and more neutral term of “repartition” or the positive term of solidarity which evokes social goodwill and strength through unity. At the opposite, the positive English expression of “funded,” which gives an impression of seriousness and security, is translated in French by the word “capitalisation” which evokes capitalism, a word which remains linked with the exploitation of workers in the nineteenth century in many minds. In theory, repartition and capitalisation are quite equivalent. Pensions are always paid with the economic production of the moment when they are paid. In France, rights are settled on future interests, market prices of shares … If the economy collapses, the value of these rights collapses too. Agirc and Arrco do not need to be funded because they are national and compulsory, as the social security system. This centralisation is also a French characteristic.

In order to maintain the repartition system, there is a need for either increasing the duration of contribution, or decreasing the amount of the pensions themselves.

The government proposes a bit of both.

Reform Package
When people are demonstrating and protesting, the same government answers “the street can give its views, but the street does not govern.” Indeed, numerous high schools have been going on strike for weeks and threaten to extend it without limits and to paralyse the traditional June sessions of exams. The idea behind the package of reforms being that the when life expectancy increases, so does the contribution period. Logical. Another issue in this country is the difference of treatments existing between the public and the private sector. Tricky point. The specific pension system constitute another basis for debate that is postponed by a cautious government.

A lot of talk. The underlying principle behind these reforms deserves mentioning: the project is based on the idea of contributions transferring from the unemployment insurance to the pensions. An accountability miracle, some would say.

No consensus has managed to emerge between the diverse trade unions. The government found a basis for agreement with some unions but not all of them, which sounds like giving him a breath of fresh air since the different unions are denouncing each other’s stance. The strikes of the civil servants are keeping their pace from Monday again. Soon the sand and oblivion of the summer will be the main weapon of the government to go through with their reform once the “divide to rule” solution will be eroded.

Parisian Transports
What about the numerous specific agreements such as the one with the Parisian transports (RATP)? they are already considered endangered by this wave of reforms. Consequently, the workers of the transportation sector are carrying a “pre-emptive” strike… using a word that we have often heard those last weeks. Some of them try to define their ambition in this respect and talk about solidarity. On the other side, the head of the union of the employers keeps bashing on the strikes’ negative effects in terms of recession, during the already traditionally lazy month of May. The finances of the government are simply short of money and cannot maintain the principle of lowering taxes, the symbol and achievement to be proud of according to their right-wing politics. The official release of another piece of information won’t help the government to sleep better. Indeed, the social security deficit scored very high last year at 3,4 billion euro, with a deepening of the deficit forecast for this year. The ghosts of 1995 are showing off and entail further questioning: what are the reasons for this deficit? Is it the recession-like climate of the country? No, the rising fees of the doctors recently agreed upon and other measures concerning hospitals may be responsible. One more time, a question: where is the emergency among those reforms, pensions, social security, …?

Thomas Piketty, economist, gives a pretty interesting outlook on the climate created by the government’s specific ordering of the priorities, which may explain the categorical opposition faced by the pension reforms. Austerity has pervaded education and research while the tackling of the issue of taxes on fortune gave rich people reasons to let their money at home.

Moreover, he allows us to challenge the debate as referred to both by the government and the unions. Neither 37,5 years nor 40 years are the panacea, and the possibilities are not that manifold in spite of such sayings by certain unions (FO). It seems that the project goes further: 42 years work will be needed to get a full pension in 2020. The private sector seems to have arrived at a satisfying compromise while the public sector still struggles.