Macron's Bold Move on Pension Reform to Delay Retirement Age

[Asia Economy Reporter Yujin Cho] The French government has proposed a pension reform plan that extends the retirement age and delays the pension benefit eligibility age. This measure was introduced as a countermeasure in response to the expected pension fund deficit due to aging, but strong social resistance and uncertain parliamentary approval have raised concerns about the smooth operation of the political situation.

On the 10th (local time), Prime Minister ?lisabeth Borne, who announced the pension reform plan, said, "We are well aware that changing the pension system frightens the public," but emphasized, "If we do not adjust the current system now, it will lead to large-scale tax increases and reduced pension benefits, threatening our pension system."

According to the French Pension Planning Committee (COR), the number of workers relative to retirees is expected to decrease over the next 10 years, turning the pension finances into a deficit. Without changes to the current pension system, it is projected that from 2022 to 2032, an annual deficit equivalent to 0.5?0.8% of the Gross Domestic Product (GDP), approximately 10 billion euros (about 13 trillion won), will be recorded.

[Image source=Reuters Yonhap News]

The pension reform plan announced that day includes raising the minimum pension eligibility age (retirement age) from the current 62 to 63 by 2027 and to 64 by 2030. Although this represents a slight retreat from the original pledge to lower the retirement age from 65 to 64, public opinion remains negative, and labor unions strongly oppose it.

A survey conducted by polling agency Odoxa on behalf of Charente and BFM TV from the 4th to 5th of this month, targeting 1,008 adults, found that 74% responded that the legal retirement age should remain at 62. In contrast, 26% supported retiring at 63, 16% supported retiring at 64, and only 13% supported retiring at 65, showing relatively low support.

Along with this negative public opinion, major French labor unions have collectively expressed opposition to the retirement age extension and have announced strikes. The extension is rejected by both hardline unions that have always opposed labor reforms and moderate unions that have been relatively receptive to reforms.

Since the ruling party failed to secure a majority in last year's general election, parliamentary approval also appears unlikely to be smooth. Although invoking a special constitutional provision could allow the bill to pass without a lower house vote, the possibility is low due to concerns over worsening public opinion.

Fortunately for the government, the center-right Republican Party has shown a favorable response to pension reform and has indicated it could support the bill on the condition that some provisions are amended.

The far-left party La France Insoumise, leading the left-wing coalition 'NUPES' with 150 seats in the lower house as the main opposition, argues that the retirement age should be lowered to 60 and taxes increased.

The far-right National Rally, which holds 88 seats, the second-largest after NUPES, has also stated it will definitely block the government's pension reform plan, claiming it harms the younger generation.