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OPINION & ANALYSIS

ANALYSIS: What you need to know to understand why pension reform spells trouble in France

Imagine a country with 42 different state pension systems, where some retire at 50 and other workers are 'cheated'. There's trouble ahead in France, writes John Lichfield.

ANALYSIS: What you need to know to understand why pension reform spells trouble in France
Previous pension reform efforts have sparked big protests. Photo: AFP

Imagine a country which has 42 different state pension systems. 

In this strange country, some workers, the lucky few, retire at 50. All, in theory, retire at 62. The average real retirement age is 63.

Some people, not necessarily rich, subsidise the pensions of others, who are not necessarily poor.

Certain state employees, such as railway and utility workers, ride on the cushions. Locomotive drivers retire at 50. Other railway and Metro and EDF-GDF employees leave work on full pensions at 55.

On the other hand, farmers and many other self-employed workers are, broadly-speaking, cheated.

Such a country exists. It is called France.

President Emmanuel Macron, not shy of a fight whatever else you may think of him, has decided that it is time that the French had a single state pension system.

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Former president Nicolas Sarkozy's effort to reform the pensions system sparked protests in 2010. Photo: AFP

This is the country’s sixth pension reform in 26 years and the most radical since a failed assault on the system by President Jacques Chirac in 1995. That attempt collapsed after public sector trades unions, especially the railway workers, brought the country to a standstill.

The barricades are being erected once again. Lawyers, joined by nurses, doctors, pilots and flight attendants, have called a day of action to defend their own state pension régimes next Monday.

Two of the bigger trades union federations – France has a dozen of them, remember – have organised protests on 21 and 24 September. There will also be industrial action on Paris' Metro and RATP systems on Friday over the plans.

The steam pressure of public anger appears less than it was 24 years ago. That may change. The Gilets Jaunes and their Black Bloc allies, after an invisible summer, hope to recover this month by surfing on a wave of pension reform unrest.

Why is Macron doing this? And why now?

The purpose of the reform is not primarily to save money. Previous mini-reforms have already put the state pension fund on a more or less sustainable footing.

The aim is to make the system fairer and less opaque and to persuade French people that longer lives must also mean longer working lives. The present “official” retirement age of 62 will be preserved but will become meaningless.

In the original plan to qualify for a “full” pension, you had to retire at 64 (with exceptions for arduous professions). If you retired earlier, your pension would fall. If you worked longer, it would increase.

This so-called “pivotal age” has now been abandoned by President Macron in a concession to the biggest and most moderate of the union federations, the CFDT.  He now suggests that a “full” pension could be earned by an agreed “full” period of contributions, which must be longer than the present 43 years.

Otherwise the plan remains the same.


Emmanuel Macron is determined to make the French pensions system clearer and simpler. Photo: AFP

Since the 1850s, France has had a “repartition” or “shares-for-all” system of state pensions in which the active pay for the retired. Macron wants to replace that with a “points” system in which each person builds up a personal pension pot during his or her working life.

He insists that only the rich will suffer and that many will benefit. This is misleading. Without changes, there will be more losers than Macron admits.

Under the present system, a state pension is based on the retiree’s best 25 years of earnings in the private sector and last six months of salary in the public sector. This would be replaced by a universal pension based on contributions made.

The unions point out, inter alia, that this will penalise people whose earnings grow with promotion or experience, such as teachers and nurses. The government should look for a solution to this and other problems in the public consultations promised before its draft law is presented some time next spring.

Macron is right to insist that sweetheart regimes for railway workers and other state employees – subsidised by all the rest – must be phased out by 2025. The SNCF, the state-owned  railways, and the RATP, the Paris Metro and bus system, operate ten of the 42 different “state” pension régimes.

It is also reasonable that final-salary related pensions for high-paid executives and civil servants should be scaled back. The corresponding boost of “petits” pensions for farmers and other self-employed workers is long overdue.

Militant unions and public sector unions portray the changes as an attack on the public service. They believe that the end of the shares-for-all system is unFrench and capitalistic.

Macron sees the changes as part of his drive to correct one of the most serious but rarely mentioned structural problems in the French economy – a relatively small working population.

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Union bosses including Yves Veyrier have promised action against the reforms. Photo: AFP

French workers are individually productive but there are few of them. High youth unemployment, lengthy third-level studies and early retirement mean that wealth creation falls on a relatively small number of French people.

According to Eurostat, 64.2 percent of the 15 to 64 age group had a job in France in 2016, compared to 74.7 percent in Germany. The economist Emmanuel Lechypre pointed out this week that individual French people worked very hard but that France, as a whole, worked fewer hours than any other EU country.

Early retirement is only one explanation of this phenomenon but later retirement is essential to stop it from growing worse. As people live longer (good) the “active” part of the population will shrink (bad) unless people work longer.

The moderate CFDT trades union federation has spoken broadly in favour of the proposed reforms. So have the employers’ federation, MEDEF.

The two largest militant union federations, the CGT and FO, have called for nationwide demonstrations next week and the week afterwards – but have failed to agree on one date or a united programme of strikes or other action.

“If we have to strike, we will,” said Yves Veyrier, head of Force Ouvrière (FO). “The mood of members is exactly as it was in 1995.”

The government’s fear is that prolonged and bad-tempered pension protests could combine with other grievances and disputes – notably strikes in hospital emergency departments and free trade protests by farmers – to produce a mood of deep social unrest this autumn and early winter. 

My best guess…

There will be a rocky few weeks. The Gilets Jaunes and the Black Blocs will, briefly, resurrect themselves. But this is not a replay of 1995.

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OPINION & ANALYSIS

OPINION: France’s ‘slow train’ revolution may just be the future for travel

Famous for its high-speed TGV trains, France is now seeing the launch of a new rail revolution - slow trains. John Lichfield looks at the ambitious plan to reconnect some of France's forgotten areas through a rail co-operative and a new philosophy of rail travel.

OPINION: France's 'slow train' revolution may just be the future for travel
The slow trains would better connect rural France. Photo: Eric Cabanis/AFP

France, the home of the Very Fast Train, is about to rediscover the Slow Train.

From the end of this year, a new railway company, actually a cooperative, will offer affordable, long-distance travel between provincial towns and cities. The new trains – Trains à Grande Lenteur (TGL)?– will wander for hours along unused, or under-used, secondary lines.

The first service will be from Bordeaux to Lyon, zig-zagging across the broad waist of France through Libourne, Périgueux, Limoges, Guéret, Montluçon and Roanne. Journey time: seven hours and 30 minutes.

Other itineraries will eventually include: Caen to Toulouse, via Limoges in nine hours and 43 minutes and Le Croisic, in Brittany, to Basel in Switzerland, with 25 intermediate stops  in 11 hours and 13 minutes.

To a railway lover like me such meandering journeys through La France Profonde sound marvellous. Can they possibly be a commercial proposition?

Some of the services, like Bordeaux-Lyon, were abandoned by the state railway company, the SNCF, several years ago. Others will be unbroken train journeys avoiding Paris which have never existed before – not even at the height of French railway boom at the end of the 19th century.

The venture has been made possible by the EU-inspired scrapping of SNCF’s monopoly on French rail passenger services. The Italian rail company Trenitalia is already competing on the high-speed TGV line between Lyon and Paris.

The low-speed trains also grow from an initiative by President Emmanuel Macron and his government to rescue some of France’s under-used, 19th century, local railways – a reversal of the policy adopted in Britain under Dr Richard Beeching from 1963.

The cross-country, slow train idea was formally approved by the rail regulator before Christmas. It has been developed by French public interest company called Railcoop (pronounced Rye-cope), which has already started its own freight service in south west France.

Ticket prices are still being calculated but they are forecast to be similar to the cost of “ride-sharing” on apps like BlaBla Car.

A little research shows that a Caen-Toulouse ticket might therefore be circa €30 for an almost ten-hour journey. SNCF currently demands between €50 and €90 for a seven-and-a-half-hour trip, including crossing Paris by Metro between Gares Saint Lazare and Montparnasse.

Maybe Railcoop is onto something after all.

The company/cooperative has over 11,000 members or “share-holders”, ranging from local authorities, businesses, pressure groups, railwaymen and women to future passengers. The minimum contribution for an individual is  €100.

The plan is to reconnect towns ignored, or poorly served, by the Train à Grande Vitesse (TGV) high speed train revolution in France of the last 40 years. Parts of the Bordeaux-Lyon route are already covered by local passenger trains; other parts are now freight only.

In the longer term, Railcoop foresees long-distance night trains; local trains on abandoned routes; and more freight trains.  It promises “new technological” solutions, such as “clean” hydrogen-powered trains.

MAP France’s planned new night trains

For the time being it plans to lease and rebuild eight three carriage, diesel trains which have been made redundant in the Auvergne-Rhône-Alpes region.

There will be no space for a buffet or restaurant car. Restaurants and shops along the route will be invited to prepare local specialities which will be sold during station stops and eaten on board.

What a wonderful idea: French provincial meals on wheels; traiteurs on trains.

Olivia Wolanin of Railcoop told me: “We want to be part of the transition to a greener future, which is inevitably going to mean more train travel.

“We also want to offer journeys at a reasonable price to people who live in or want to visit parts of France where train services have all but vanished. We see ourselves as a service for people who have no cars – but also for people who DO have cars.”

Full disclosure. I am a fan of railways. I spent much of my childhood at Crewe station in Cheshire closely observing trains.

Three years ago I wrote a column for The Local on the dilemma facing SNCF and the French government on the 9,000 kilometres of underused and under-maintained local railway lines in France. Something like half had been reduced to low speeds because the track was so unreliable. Several dozen lines had been “suspended” but not yet officially axed.

The government commissioned senior civil servant, and rail-lover, François Philizot to study the problem. After many delays, he reported that much of the French rail network was in a state of “collapse”. Far from turning out to be a French Beeching, he recommended that a few lines might have to close but most could and should be saved – either by national government or by regional governments.

Since then the Emmanuel Macron-Jean Castex government has promised a big new chunk of spending on “small lines” as part of its €100 billion three year Covid-recovery plan. Even more spending is needed but, for the first time since the TGV revolution began in 1981, big sums are to be spent on old lines in France as well as new ones.

The Railcoop cross-country network, to be completed by 2024-5, will run (at an average of 90 kph) partly on those tracks. Can it succeed where a similar German scheme  failed?

François Philizot suggested in a recent interview with Le Monde that a revival of slow trains might work – so long as we accept that a greener future will also be a less frenetic future.

“When you’re not shooting across the country like an arrow at 300 kph, you can see much more and you can think for much longer,” Philizot said.

Amen to that.

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