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Pensions in France



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The Financial Times has today’s weather for France. Stormy, they say:

Three years after taking office, and just two away from the next election, President Nicolas Sarkozy has staked his reputation on what is described as “the mother of all reforms”.

The reform is raising the age of retirement. And the reaction to that outrage is even more predictable than the weather:

Unions are hoping that unease will encourage record numbers to join a national strike today, likely to paralyse public services,

says the FT. Sarkozy’s dilemma:

To be successful, he cannot simply seek new funds to fill an annual gap that official forecasts suggest could exceed €100bn by 2050.

He will also have to challenge certain privileges, which have come to define the French way of life, that the state can no longer afford. They include the right to a long and relatively comfortable retirement from the early age of 60; perks for 5m civil service and public sector workers that allow them to retire even earlier; and bonuses and tax breaks that provide pensioners with on average a higher standard of living than ordinary workers.

In the government’s own words, pension reform “cannot be reduced to a reform of the framework. It is a reform of society.”

First the 35-hour week, now this. With little economic growth and max-tax, there’s no room for maneuvering other than taking stuff back. Obviously, France isn’t the only European country to start suffering the roll-backs necessary to avoid financial catastrophe, and every roll-back will get a push-back from leftist agitators, state workers, and the unions. Italy goes on strike on-and-off all June, for example.

But the promise of a full and early retirement is as intrinsic to Frenchness as tarte aux pommes. In agreeing to an aggregate (and not very progressive) tax bite of around 70 percent, French workers feel entitled to the promises made by politicians, and few promises are as sacrosanct as this one, that at age 60, you can kick back on a beach somewhere stonking while others, including a few million Muslim immigrants, keep you cool with cash. If you’re a state worker the retirement age is even earlier.

No wonder the leaderless Left in France is hoping this will be the straw that breaks Sarko’s back.

Libération lists the sectors involved. 20 minutes is tracking the day’s events. But in my little village, La Poste was here on time this morning, delivering letters two weeks late and sent from London via Moldova. Every May is strike month in France (it’s also holiday month; half the month is taken up by days off for Pentecost and whatnot). We’ve already suffered strikes by the unemployed. How much worse can it get? Apparently, the “paralysis” the unions hoped for seems to be partial at best.

The balance is between anger at having paid huge taxes for years only to have the state reneg, and the fear of economic collapse, a fear that finally seems to be settling at street level.



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