"The French retire early, partly so they can help take care of their grandchildren”

Published on: 15 March 2023

The French parliament may nevertheless approve President Macron’s pension reform plans on Thursday, March 16, against which there have been several very large-scale demonstrations and strikes. The hot issue: raising the retirement age from 62 to 64. Why are the French so stubbornly clinging to achievements that seem financially unsustainable? We asked Pieter de Gooijer, partner at consulting firm Brunswick, who held the position of Dutch ambassador in Paris for five years.


There is a lot of opposition among the French population to the pension system reform plans, on which the French parliament has yet to decide. Resistance is especially strong in the Assemblée Nationale (the French equivalent of the Dutch House of Representatives). A committee from Assemblée and Sénat (French Senate) is now working on a compromise that will be put to a vote as a whole, possibly as early as Thursday, March 16. In his first five-year term, Macron already tried to modernize the fragmented pension system. Now, in his second and final term, he is making a new attempt. The central element is raising the retirement age from 62 to 64. To the Dutch, this sounds modest. After all, ours is 67 and this age will be raised automatically in the future as a result of a further increase in age expectancy - albeit, thanks to the pension agreement, not as soon as previously conceived.



Life expectancy keeps increasing in France too, so the sustainability of the system is a growing concern. Working longer seems to be the logical answer to this. Many see that, yet the majority of the population is against shifting the retirement age. Even though a look at the so-called Mercer index - in which pension systems from around the world are assessed on various criteria - reveals that while the French system scores high on pension benefits, it scores low on long-term financial sustainability. The question therefore arises: why are the French so stubbornly clinging to a retirement age that seems financially unsustainable?

The financial sustainability of the French pension system is indeed coming under more pressure due to an aging population, agrees De Gooijer, who was Dutch ambassador to Paris from 2017 to the summer of 2022. Moreover, that pressure is arising sooner in France than in our country.


Under pressure
“Financing the French system differs fundamentally from the way the Dutch system is financed. In our country, the premiums and taxes for the state pension - the so-called first pillar of our pension system - are paid out in the same year they are paid. In addition, in the Netherlands we have the pension funds - the second pillar - which are financed on a capital basis, meaning that premiums paid are first invested for years. In France, however, the first and second pillars largely coincide and the second pillar is also almost entirely financed as pay-as-you-go, like our state pension. This is putting increasing pressure on financial sustainability, because an aging population means that there are fewer and fewer people employed compared to the number of pensioners - and so they have to pay more and more per person to keep pensions at the same level. Because the French system is financed almost entirely as pay-as-you-go, financial sustainability is more vulnerable than in the Dutch system, which is only partially financed on a pay-as-you-go basis.”


Champion of working part-time
Yet, according to De Gooijer, that is not the whole story. Because there are also differences between France and the Netherlands that work exactly the other way around.


“The Dutch work a lot longer than the French. However, we are the champion part-time worker of all European and OECD countries, so we work fewer hours per year. French parents often both work full-time. Very many working parents therefore call on relatively young grandparents to take on some of the care of grandchildren, especially during the long school vacations. This is one reason why young French people do not want their parents to retire later, and grandparents do not want to work longer.”


Another difference that speaks in favor of the French is their attitude toward migration. De Gooijer: “French society seems to be more open to migrants. At least, it seems to assimilate them into French culture more quickly. To the extent that there is more immigration in France than in the Netherlands, it has a delaying effect on aging of the population.”



The statement, “The Dutch work much longer than the French and so their retirement age is far too low,” is therefore not without its critics. But there are also cultural and political reasons why the French do not take this longer working life for granted, De Gooijer explains.


“In the Netherlands, many working people feel connected to their work, their colleagues and their company or employer. In France, this is much less the case. Many French people feel no affinity with their work, experience the usual hierarchy as distant, and have the greatest desire to be able to retire as soon as possible.


Moreover, while French people are supporters of a strong state with ample opportunities to intervene in the economy and society, at the same time they do not like the state. Indeed, the tradition is to oppose it. Outside Paris, you can describe politics with the negatively intended term le pouvoir. Macron is seen by many French people as a former investment banker who may have started his political career with the Parti Socialiste, but then betrayed the left to rule with Les Republicains and other right-wing forces. In that perspective, he owes his second victory at least as much to a dislike of Marine Le Pen as to a positive choice of his program.”


François Mitterrand
De Gooijer continues: “Moreover, the retirement age of 62 was introduced in France as a reduction by the now mythical leftist President François Mitterrand. This reduction was and is seen as one of his great social reforms. Incidentally, this was not all that unusual in the 1980s. In the Netherlands, too, all kinds of forms of early retirement - such as the VUT - were long looked at as a solution to (youth) unemployment. By now the economic consensus is that that doesn’t work, but in France that certainly has not yet landed with the electorate.”


Meanwhile, probably partly for opportunistic reasons, both the far right (Marine Le Pen) and the far left (Jean-Luc Mélenchon’s La France Insoumise) and all the unions have seized on the pension issue to oppose Macron, says De Gooijer.


Preferably not
So won’t Macron's proposal turn out to be a failure? According to the former ambassador, not necessarily.


“Ultimately, the French pension system needs reform and this is Macron's last term. So, he personally does not have to fear not being re-elected if he perseveres. I also have the impression that the French government is deliberately letting the public discussion continue while parliament debates the proposals, to see if sub-topics surface where partial concessions are possible - for example, by taking a little more account of the rigor of certain occupations and the length of one’s career rather than just age. Or by making a little more room for childcare responsibilities, if necessary. If the demonstrations stop growing or possibly even fade a little, limited concessions might achieve a lot. Incidentally, Article 49-3 of the French constitution also allows the prime minister to enact laws himself instead of parliament. Macron will prefer not to resort to that, but the knowledge that it is possible may help convince parts of parliament that a compromise could also make sense.”