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Pensions weigh more and more heavily on public spending

2021-03-04T10:38:03.445Z

This item has largely contributed to the increase in public spending observed between 2001 and 2019, which will encourage the government to carry out its reform.



Pensions continue to weigh more heavily on constantly increasing public spending.

According to a note from Fipeco published on Thursday, the latter jumped 3.9 points between 2001 and 2019, from 51.7% of GDP to 55.6%, while the euro zone average has hardly not changed over the period (46.9% of GDP in 2001 and 47.0% in 2019).

The gap with the rest of the euro zone widened by 8.6 points.

Social spending was the main driver of this increase (+4.5 points against +2.9 points for our neighbors) and among them, pensions.

Spending on the latter increased by 2.8 percentage points of GDP between 2001 and 2019, while it only increased by 1.5 percentage points in the rest of the euro area.

Read also: France remains a champion of public social spending

Pensions thus represented 14.6% of public spending in 2019 compared to 12.4% in the other euro area countries.

They are therefore those for which the gap between France and its neighbors is the largest (2.2 points of GDP).

Compulsory supplementary plans

François Ecalle, author of this study, puts forward two explanations for this phenomenon.

The first results from the “

compulsory and monopolistic

” nature of the supplementary pay-as-you-go schemes that are AGIRC-ARRCO for employees in the private sector.

Plans that are classified as general government.

In other countries, these supplementary schemes are often pension funds and are often the subject of a choice, at the level of the branch or the company.

They are therefore classified outside the scope of public administrations

”.

Another explanation: the "

level of pensions in relation to income from working people and the relatively large number of retirees due to an early retirement age and a high life expectancy at this age in France

".

A necessary reform

These findings will add water to the mill of Bruno Le Maire who continues to highlight the importance of the pension reform to clean up the public accounts.

"

I have always felt that it was necessary to encourage the French to work longer to finance our model of social protection,

" he reaffirmed during a hearing before the Senate on Tuesday, March 2.

If reform is not on the social agenda for the moment, it will have to come back to the fore once the health and economic crisis is behind us, he warns.

Read also: The pension reform suspended due to the health crisis

Bercy also recalls that the accounts of the pension plan continue to deteriorate.

According to the Pension Orientation Committee (COR), the deficit of the pension system reached 23.5 billion euros in 2020. “

We are the developed country that works the least.

And at the same time, we are the country which has the social protection system which is among the most generous.

It is no longer tenable and the French know it,

”recalled in February.

Other expense items

In addition to pensions, Fipeco notes that in 2019, public

health

expenditure

in France is 0.9 percentage point of GDP higher than in the euro zone.

Expenses allocated to

families, the unemployed and the fight against social exclusion

are also higher in France.

The cost of the

housing

policy

is also twice as high in France as in the euro zone.

France also spends more than its neighbors in the

military

field

but also in

education

.

France's public spending is inferior or equal to that of the euro zone for only two functions:

public order and security

(justice, police and prisons), which is mainly due to the judicial services, and

the service of public debt

(thanks to interest rates lower than the euro zone average),

”notes François Ecalle.

Public expenditure items in 2019 Fipeco

Source: lefigaro

All news articles on 2021-03-04

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