Is increased retirement age really the reason for 2023 protests in France?

Question

1. France has one of the world's highest working populations by percentage. Hence, the lack of jobs/unemployment is clearly not the root cause of this problem.
2. Most protestors are relatively young (20-30 age group)
3. If protests succeed, there is a net negative for most protestors since the government would have to increase taxes to deal with the budget deficits.

I understand that the reason people can protest is the exemplary working conditions and the chance of work-life balance, but, why would the majority protest for something which may disadvantage them?

Another point is, I as a person who is also from this age group, can not imagine protesting for things that are 40 years ahead of me, and also, at the same time would probably be irrelevant by then.

Answer 1

It’s a reason

Like most things in politics there isn’t a simple cause and effect.

Pensions in France are complicated and I’m not going to pretend that I understand them. However, for most working people, the bulk of their pension will come from payroll taxes levied on them and their employers over the course of their working life. Thus most of the protestors understand very well that the pensions come from taxes but in a very real sense the come from taxes they personally pay. In a sense, these are not taxes - they are personal contributions to their own retirement.

They had a “deal” with the government and the government is unilaterally renegotiating it. These types of plans, whether they are centrally managed as in France or personally managed but with concessional taxation as in the USA or Australia are political dynamite to mess around with. Nobody really cares if governments spend a little more or less on welfare, defence, education or health but f%$k with my money and I’ll vote you out so fast your head will spin.

There is a fascinating dichotomy at the heart of any welfare state and it goes like this: is my pension paid for by the taxes I contributed through my working life or is it funded by the taxes of people who are working after I retire? Now, because most people don’t like to think of themselves as welfare recipients, they believe it’s the former but, economically, it’s the latter. While working populations and productivity were growing faster than pension demands, resolving the dichotomy can be avoided, however, in most of the developed world, workforce to pensioner ratios are falling and worker productivity growth is small.

This is a problem but not yet a crisis.

Which brings us to the another issue at the heart of these protests. The government is implementing the changes to address a non-crisis using undemocratic crisis measures in the French Constitution. Many of the protesters are protesting against that - the French are far more “hands on” with their democracy than most of the Anglo-sphere. Liberté, égalité, fraternité.

Also, the French are really keen on égalité and fraternité and they understand that the changes are going to have a greater impact on those who work with their hands rather than their heads. In general, its going to hurt those who leave school early and work longer for less pay over the course of their lives more than those who go to university, earn more money and may be independently wealth in retirement. That’s unfair and the French (even the rich ones) like fairness.

Answer 2

Frame challenge, from doing a bit of research: The protests were not about "retirement age", which is usually a concept which is specific in meaning but nebulous in execution except in very specific situations (usually unionized work). It is about "pension age", which is very specific. The pension age is the age at which you can retire to receive full pension benefits. The lower the pension age, the earlier you can receive state pension benefits.

Clearly, the "working population" wants to receive pension benefits as early as possible, because it means they have to work less and can retire earlier, while the government wants the pension age to be as high as possible, so they don't have to pay out as many pension benefits (because of people who died before/shortly after attaining pension age). So that's the root of the struggle.

Now, regarding the individual points:

1. I'm not sure why this is relevant except to say that this change impacts the most people in France as opposed to if it was in some other country. But we're not talking about some other country, we're talking about France.

2. Age doesn't matter in this scenario. What the government is saying is "you will have to work an extra 2 years (the change was 62 -> 64) before you can receive your full pension benefits". That's a detriment to you, whether you're young or old (unless you're over the age of 64). If you personally aren't thinking about what's happening to you when you're 62 years old now, you may want to rethink your own life strategy; you should absolutely be planning for your own retirement for your entire life, not just when it's close and you realize you have no money and you'll never be able to retire and you'll have to work until you die. A lot of unfortunate people get trapped that way.

3. You assume that the protestors see the (obvious) fact that if the government can't cut spending somewhere, they'll have to cut it somewhere else, or they'll have to raise revenue (taxes). While this is a pretty easy fact to understand for those who understand economics and finance, the populace at large of pretty much any Western democratic society (and indeed of non-Western, non-democratic societies as well, but we're talking about France) are largely uneducated in such matters, and they simply assume the government is taking their money because they're evil or something, idk. You assume they see the dichotomy that you see, between giving up something in terms of pension age, or giving up something, perhaps much more costly/dire, in some other fashion; that assumption (that the populace at large understands that notion) is almost certainly not correct.

EDIT: Upon doing more research, it seems that the specific statement of the problem is regards to the stability of the pension system with the problem of an aging population. My above comment that the layman probably has no idea how economics work is still relevant, but also it's noteworthy to note that the particular problem statement is not, for example, that the government won't be able to fund military because they are funding pension, or something like that.

Answer 3

On the economic front, there are still major doubts among the population about the very need for reform, and about the effectiveness of the current reform in redressing the situation.

A report on the financial outlook for the pension systems was published in September 2022 by the COR (Conseil d'Orientation des Retraites), and is the basis for the government's argument that more money needs to be brought into the system.

But the report is actually more nuanced. According to this interview with Michael Zemmour (Senior lecturer in economics at the University of Paris-I):

[The report] tells us that spending is under control and that the system is not in danger. On the balance, it tells us that it depends on the conventions and macroeconomic assumptions of the moment, but that in the long term it is in surplus. On the other hand, he alerts us to a drop in revenues, particularly those coming from the State, which causes a deficit, while expenditures are stable. And in any case, this deficit is not a threat. It is a small deficit on the scale of the pension system. He also warns about the programmed drop in the level of pensions for tomorrow's retirees, who risk having a relative standard of living 20% lower than today. Either we agree with this and do nothing, or we think it is a concern and additional funding will have to be provided.

This analysis has been widely taken up by the unions and is fairly well integrated among the opponents of the reform. An example from the FSU (the main teachers' union):

In the September 2022 report of the COR, the changes in the share of pension expenditure in GDP would remain quite controlled until 2070. The expenses do not explode because the successive reforms since 1993 have taken their toll and lowered the level of pensions. The COR has calculated that, without these various reforms and the change in the indexation method in the basic schemes, the share of expenditure would be 18.9% of GDP in 2070 with a growth assumption of 1.3%. A largely sustainable effort.

While the COR projects an average retirement age of 63.7 in 2040 without reform, and while currently more than half of all employees have left the workforce at 62, postponing the legal retirement age to 64 is unjustifiable both economically and in terms of the cost of the reform.

Another point of opposition concerns the effectiveness of the reform compared to the efforts required of workers.

Indeed, the initial reform foresaw a saving of 17.7 billion euros, to fill a deficit of 13.5 billion euros by 2030, leaving a margin of nearly 4 billion euros. But to make the reform more popular and try to reach a majority in parliament, social measures have been granted (for people with disabilities or inaptitude, for long careers, for mothers), which in the end will cost nearly 7 billion euros, leaving the system in deficit. Opponents of the reform therefore argue that the efforts required of workers are too great in relation to the announced gains of the reform, and that the estimated deficit of 17.7 billion euros in 2030, which is largely overestimated, can be borne by the state budget (over 600 billion euros).