We've read a lot about the French protests - about the anger and distrust - but what about the economics?
The BuffPo has investigated and found that the pension savings are TINY compared to, say, the cost of France’s new nuclear electricity program.
According to Emmanuel Macron's electoral program, his pension reform could save up to €9 billion! However, the Élysée accepts that the cost of "accompanying measures" intended to make the potion acceptable must be subtracted from this. And runs out in figures published in the French government's autumn budget documents, that €6 billion will be needed by 2027 to implement the reform.
So, the pension "reform" saves only a paltry €3 billion! As Le Monde puts it, This amounts to a meager gain compared to the hundreds of billions spent both to support the economy during the Covid-19 epidemic and then to compensate households, drivers and businesses for the recent surge in energy prices. Macron's pension savings look like "Chickpeas in the couscous!" according to one expert, quoted by the newspaper.
However, despite arguing that the savings are tiny, the ‘Renaissance’ party line is that France must save money to reassure the financial markets. So, the real reason for the "reform" is not that French people don't work hard enough but rather that France's budget deficit is currently out of control. Yet, Le Monde misses the elephant in the room: there are numerous ways to save money – not to forget numerous ways to raise money. Cancelling Macron's plans to develop the nuclear energy sector, for example, would save €51 billion! But it seems instead that everyone must work these additional years to keep the nuclear lobby in cash.
According to Foreign Policy: "In Flamanville (northwest France), the French energy firm EDF is struggling to finish a reactor that is a full decade behind schedule and now roughly four times above cost projections."
Indeed, not one reactor conceived since 2000 in the European Union has generated even a single kilowatt of energy!
One thing that could be said in favor of the "pension reform" is that there doesn’t seem to be a tradeoff between older workers staying on and younger people being unemployed. Evidence from previous changes is that, if anything, older people staying in the jobs market actually increases jobs – although no one is sure why.
However, another correlation, much less often cited, is that older people working longer may reduce innovation. Economists at "IZA World of Labor" warn that with older workers more likely to occupy high-skill jobs, “delayed retirement may force young workers into occupational downgrading,” that's taking a job below their skill level, or oblige them to accept part-time work to find employment.
And although the whole need for the pension "reform" is to reassure the markets that France's budget debt won't get bigger, the French public finances have always been in deficit since the first oil shock (1975), regardless of up-turns or down-turns of the economic cycle.
The fact, is, at the moment France spends over €50 billion a year as payments for the debt. So taking from the pensioners is the politics of distraction. Add to which, even if the savings on the pensions could be considered as significant when added up over 50 years, of course, there's no reason to think that a future government won't change the plans back. So the economics of the plan just do not add up. It’s quite possible Mr. Macron - for all his career in finance - has, this time, got his figures wrong.
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