Government launches pensions reform

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A reform of France's state pensions system was officially launched in January 2003 by President Jacques Chirac. To prepare the ground for negotiations over the reform, the seven main trade union organisations signed a joint statement and organised a day of demonstrations on 1 February. In early February, the Prime Minister presented the outlines of the reform, to a mixed reaction from the social partners.

On 6 January 2003, President Jacques Chirac launched the long awaited reform of the state pensions system (FR0212104F). In a speech, he laid out the timetable, the outline and the method to be adopted by the conservative government led by Prime Minister Jean-Pierre Raffarin. Among other statements, he gave a guarantee that the 'pay-as-you-go' system (whereby current pensions are met from the contributions of those currently in employment) would remain in place.

Joint union statement on pensions

Also on 6 January, the seven trade union organisations that are represented on the Pensions Stewardship Council (Conseil d'orientation des retraites) (FR0201112F) signed a joint statement on pensions. These were the French Democratic Confederation of Labour (Confédération française démocratique du travail, CFDT), General Confederation of Labour (Confédération générale du travail, CGT), French Christian Workers’ Confederation (Confédération française des travailleurs chrétiens, CFTC), French Confederation of Professional and Managerial Staff – General Confederation of Professional and Managerial Staff (Confédération française de l'encadrement - Confédération générale des cadres, CFE-CGC), General Confederation of Labour-Force ouvrière (Confédération générale du travail - Force ouvrière, CGT-FO), National Federation of Independent Unions (Union nationale des unions autonomes, UNSA), and United Union Federation (Fédération syndicale unitaire, FSU). Seven objectives were laid out in this joint initiative for approaching the forthcoming negotiations over reform:

1. aiming for a high level of pensions, with a high replacement rate, guaranteed purchasing power and improved minimum levels;

2. securing the right for employees to retire at 60 on full pension, with this age being the collective reference point around which individual choices can be made;

3. giving priority to active employment policies to end age discrimination (against older workers) in the labour market;

4. taking specific measures for particular categories of worker, in order to take account of physically demanding work, validate certain periods of forced unemployment or training, bring child benefits and survivor's benefits into line with one another, and eliminate inequalities between employees derived from the co-existence of several pension schemes;

5. obtaining eligibility to retire on full pension before the age of 60 for employees with 40 years' contributions already paid;

6. changing the system for compensation paid by the various pension schemes when a person moves from one to another; and

7. guaranteeing sufficient funding and ensuring that financial resources go regularly into the Pension Reserve Fund (Fonds de réserve des retraites).

The seven union organisations called a joint demonstration over pensions on 1 February 2003. This was attended by between 250,000 and 500,000 people, more than the previous one on the same issue in 25 January 2001 (FR0102132F). The objective was to pressurise the government into taking trade union demands into account.

The role of negotiations in the pensions reform process is a bone of contention between the unions and the government, the latter having spoken since the outset of 'consultation'. Following the mobilisation on 1 February, the Minister for Social Affairs, François Fillon stated that: 'the unions will not be spectators'. However, he said that 'we negotiate with the unions, then parliament votes. They are two distinct actions.' The president of the Movement of French Enterprises (Mouvement des entreprises de France, MEDEF), employers’ confederation, Ernest-Antoine Seillière, stated that in relation to pensions, the decision should be the government's, and that no negotiation with the unions was necessary.

Government’s plan for pensions reform

On 3 February, the Prime Minister outlined the pensions reform to the Economic and Social Council (Conseil économique et social, CES), the consultative body on which trade unions and employers' organisations are represented. The main points are as follows

• The first objective is to balance the budget of the state pension schemes by 2020, by adjusting pension levels, the level of contributions and the period for which they are paid. Adjustments will be made within a yet to be determined timeframe. The reform will be implemented over several years.

• The second objective is to guarantee pensioners’ purchasing power through 'a decent level of pension'. While favourable to the improvement of low pensions and taking into account the physical arduousness of certain occupations, Mr Raffarin stressed that all improvements would increase the financial burden and that it would be unrealistic to make the option of retirement before the age of 60 widely available.

• The third aim is to comply with the 'principle of justice', without challenging the diversity of the various schemes. Refusing to pit civil servants against private sector employees, the Prime Minister nevertheless thinks that the size of the funding requirements of civil service schemes and the demands of equity mean that a harmonisation process should take place, especially in terms of the number of years for which contributions have to be paid.

• Increased labour force participation rates, the fourth objective, are to be attained both with increased support for the care of new-born children (a topic to be dealt with by the next 'Conference on the Family'[FR0107169F] to be held by summer 2003), a more active employment policy, especially in order that older employees can remain at work until retirement age, and flexibility in the retirement age, within set limits for those who want to retire earlier. The Prime Minister stressed that the French people’s genuine right to be kept informed would be observed. Assistance for voluntary savings would be extended. Lastly, Mr Raffarin announced a 'national conference to mobilise support over lifelong learning and job creation' before the end of February.

The Prime Minister wants debates to be held in each regional Economic and Social Council. Moreover, the Minister for Social Affairs hosted bilateral consultations with the social partners between 6-12 February 2003.

The month of March will be dedicated to discussions with all actors, especially the social partners. The reform plan will be introduced in the spring. The ensuing bill is scheduled with a view to a vote in parliament before the summer. The Prime Minister categorically ruled out a referendum on pensions reform.

Reactions

There was quite a diverse trade union response to the Prime Minister's 3 February speech. François Chérèque of CFDT found ingredients of the union's joint statement in it, and stated that the government had listened to employees. Bernard Thibault of CGT, on the other hand, felt that union demands had not been listened to, and that there had been a number of hesitations, and even contradictions, in the Prime Minister’s speech. Jean-Luc Cazettes of CFE-CGC and Jacques Voisin of CFTC thought that there was nothing much in Mr Raffarin's statement that had not been covered by Jacques Chirac’s speech. Mr Cazettes also thought that the timetable was very tight. Alain Olive of UNSA stressed the fact that the Pension Reserve Fund had not been mentioned. Lastly, Marc Blondel of CGT-FO wanted employers to be incorporated into the social dialogue on this issue, to avoid them challenging the outcomes.

The employers maintained a more united front. The MEDEF president said that he was satisfied, while emphasising the need for rapid reform and stating that an increase in the required number of years of contributions for pensions was the only solution compatible with maintaining current levels of competitiveness. Jean-François Roubaud of the General Confederation of Small and Medium-sized Enterprises (Confédération générale des petites et moyennes entreprises, CGPME), thought the Prime Minister’s speech very detailed. Lastly, the Craftwork Employers' Association (Union professionnelle artisanale, UPA), stated that the government’s four objectives matched its own main expectations.

Several unions, particularly CFTC and CFE-CGC, as well as the employers’ associations CGPME and UPA, expressed satisfaction with the announcement of the national conference on lifelong learning and job creation. Ernest-Antoine Seillière of MEDEF, however, said that he was surprised at the announcement, while intersectoral bargaining among the social partners was under way on lifelong learning (FR0302104N).

Commentary

The main outlines of pensions reform are still relatively vague. The concentration of the debate on the number of years of contributions to be paid and the harmonisation of the private sector and the civil service schemes should not mean that other aspects of the reform, particularly child benefits, still scarcely discussed, should be forgotten. 2003 is also the year when the Balladur government's reform of pensions, launched in 1993, comes into full effect. The loss of purchasing power of private sector pensions is highly controversial for the unions, especially CGT and CGT-FO. Lastly, a new agreement is to be signed by the end of June 2003 to extend the lifetime of the joint Association for the Management of the AGIRC-ARRCO Supplementary Pensions Funds (Association pour la gestion du fonds de financement AGIRC-ARRCO). As for raising the labour force participation rates for workers aged 55 and over, this might be more difficult to attain with a fresh wave of restructuring imminent. (Annie Jolivet, IRES)