Pension reform has always been a hot-button topic in France. In 2019, President Emmanuel Macron’s proposal to raise the retirement age and create a universal state-run pension system led to the longest worker strike in the history of modern France.
And now, just ahead of the French presidential election taking place this month, Macron has made pension reform one of the top issues of his campaign.
“He put it on the top of his platform,” says Michael Zemmour, a research fellow at Sciences Po in France who specializes in political and welfare economics. “This is more about confrontation about social rights and entitlements than [a] pure economic problem.”
Macron’s proposal is to raise the retirement age to 65 from 62. Marine Le Pen, Macron’s right-wing rival, wants to lower the retirement age to 60. France currently has the third highest level of pension spending in the entire OECD as a percentage of GDP.
Hervé Boulhol, a senior economist at the OECD, says ballooning pension costs are a problem. Nevertheless, he thinks that continuing an arbitrary retirement age, which both politicians are proposing, isn’t the smartest way to go about things.
“One thing we keep saying is that it makes sense to at least link retirement age to life expectancy,” says Boulhol.
France has a pay-as-you-go system, which means that the pension funds are not invested before being paid out to beneficiaries. However, the pensions can still struggle with funding if there are too few young people paying in to support a growing older population.
French citizens will be going to the polls for the first round of elections this Sunday, April 10. If no single candidate wins the majority of the vote, which is likely to happen, then there will be a runoff election between the top two candidates. This second election will take place on April 24.