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France: An expert explains why the pension system is unfair

2019-12-05T16:50:35.831Z

People across France are demonstrating against President Macron's proposed pension reform. What can be improved on the current system?




Unfair, unbalanced, anti-social: The criticism of the pension plans of French President Emmanuel Macron shows in mass protests across the country. OECD pension expert Monika Queisser explains the background to the general strike that has paralyzed all of France since Thursday morning.

SPIEGEL: Since this morning, public employees are protesting against the government's planned pension reform - because they fear for their privileges or because the proposed reform is indeed unfair?

Queisser: I would rather say that the old pension system that has existed since 1945 is unfair. There are 42 different pension schemes in France for different professions, including the so-called "régimes spéciaux" for employees of state enterprises and civil servants. This means that every euro that is deposited will yield a different pension depending on the system. The main objective of the planned reform is to create a unified system. But of course there are always winners and losers. And the losers include those who previously benefited from a particularly generous pension system. These include the railway workers of the state-owned company SNCF and the employees of the Paris transport company RATP, which are therefore on strike today.

SPIEGEL: So far, employees have been able to retire in part from the age of 52. What does it mean, if the SNCF goes on strike, that was already the case during the protests of several weeks in 1995?

Queisser: The SNCF has great power. When the work has stopped, it just affects a lot of people. But other professional groups have joined in, who fear that the reform will make it worse for them to retire. Also nearly 50 percent of the teachers and many lawyers are protesting. In the beginning, the French were more open to the government's reform project. Still, many details are not known. But the longer it takes, the more resistance there is. In the vacuum that has arisen, everyone projects their own fears. Many have such a diffuse feeling that it will somehow be unfair without them knowing exactly what is changing.

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Strike in France: Day of mass protests

SPIEGEL: Was it a mistake that the government kept everything in check for so long?

Queisser: It was good that she had a lengthy discussion with the social partners. In France, that is not as self-evident as in Germany, so it was urgently necessary. It was about fundamental questions: how much redistribution, how much solidarity do you want? How do you keep it with intergenerational fairness? However, one has, if one has agreed with unions and employers on basic values, eventually put the cards on the table. This has taken a long time, until next week, the government wants to disclose their plans.

SPIEGEL: The OECD has repeatedly criticized the existing pension system. Do you advocate the planned conversion into a point system?

Queisser: Absolutely, it's right to unify the system. At the moment it is not only unfair, but also totally confusing due to the wild juxtaposition of a multitude of special regulations. It becomes quite difficult when you change the pension system several times in your professional life, which is now the rule. Many people have pension entitlements from multiple systems and little clarity about which pension comes out in the end.

SPIEGEL: What makes the pension in France so unfair?

Queisser: So far there are two compulsory systems, the so-called regime général, ie the basic pension system, and a compulsory supplementary pension system, which already works today according to the points principle. For the basic pension, an income base is calculated by taking the 25 best income years and calculating an average salary on this basis. 50 percent of this will then be paid as a pension. Above all, this calculation favors employees with a high income progression, ie generally higher-earning people. If you only earn a minimum or a little more for a lifetime, that's no use. In addition, hours worked, for example by craftsmen, are taken into account only if a minimum of 150 hours per trimester is achieved. The new system stipulates that every hour worked, every euro paid will be credited. Regardless of the planned reduction of special regimes, the new calculations will provide more equity.

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SPIEGEL: On average, the French receive much higher pensions than the Germans, how does that come about?

Queisser: France simply pays much more for pensions than Germany, about 14 percent of the gross national product, in Germany it is only 11 percent. The total pension expenditure is thus higher and the performance calculation is more generous. The average French pension is more than 1600 euros. In contrast to Germany, most French people also have an additional pension. In Germany, company care is not compulsory. Another reason is that French women are working full-time much more often and are earning higher pension entitlements, which raises the average.

SPIEGEL: What is France facing in the coming days?

Queisser: That's hard to say. The specter of the protests of 1995 is conjured up again and again, at that time the strikes lasted for weeks. But I think we are in a different situation today. The strike has been announced for a long time. Companies and schools have prepared for it, meetings have been relocated. If it takes a long time, which we do not know today, then the protests can be very powerful.

Source: spiegel

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