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ORIGINAL FRENCH ARTICLE: Retraites : l’été de tous les coups en douce

by Nicolas Dutent with T. L.

Retirement : the summer of every underhand blow

Translated Thursday 15 August 2013, by Gene Zbikowski

The government is sending up more and more trial balloons on retirement. On numerous occasions, it has expounded on an “inevitable” increase in the generalized social contribution (CSG) tax. This is a perspective that can only gladden the bosses, whose money-bags would be spared yet again…

No quiet on the retirement front, even in mid-August. Whereas it is to present its reform plans to the trade unions at the end of the month, the government seems to have seized upon the summer holiday truce to send up more and more trial balloons to test public opinion. With “the-sky-is-falling” figures in the air – by 2020, the financing needs are estimated at 7.5 billion euros for the general retirement fund and at 20 billion euros for all of the funds – the idea of increasing the generalized social contribution (CSG) tax, which was established by Michel Rocard in 1990, is beginning to occupy the minds of many Socialist leaders. This measure – already contained in Louis Gallois’s proposals on “competitiveness” last Fall – is recommended in the Moreau report of June. When the Socialist Party was in opposition, it fought against shifting the financing of social security protections from contributions to taxes in the form of the right-wing UMP party’s proposed social value added tax. Now that it is in power, can it adopt this principle in the form of hiking the CSG tax?

While proclaiming that retirement reform must not be “sudden,” Health Minister Marisol Touraine, whose responsibility it is to present a project on retirement for Cabinet consideration at the end of August, has indicated that a possible increase in the CSG tax to make up the deficits in the retirement funds is, in her view, “an option that is decidedly and strongly coherent.” Even more clearly, Bruno Le Roux, the leader of the Socialist deputies in the National Assembly, has said he does not want the hypothesis of a CSG increase to be “ruled out,” while promising to “examine how companies are going to participate.”

Putting a strain on purchasing power

This is the nub of the problem: How can Capital be made to participate in financing retirement pensions? Nothing will be decided before the end of the month, the government states, but everyone is obsessed by the cash-generating potential of the CSG tax. “In 2011, it generated 92 billion euros for Social Security,” Pierre Ramon-Baldié, deputy director of the National Institute of Social Security, said in anticipation. “If it is increased by one percentage point, that will bring in an additional 12.4 billion euros.” The harmonization which would follow from this measure, to wit bringing the rate of the CSG tax paid by retirees (6.6%) in line with that paid by active workers (7.5%) to finance new social security programs (apprenticeship, early retirement for workers doing hard jobs…) is not to the taste of some trade unions. “We think that an increase in the CSG tax would be totally counter-productive, reducing even more the purchasing power of both active and retired workers, and lowering the already very low level of consumer spending,” the CGT warned in a recent press statement. “In the end, this increase would only reinforce the spiral of massive job destruction.”

The MEDEF is rubbing its hands with glee

The government thinks that increasing the CSG tax, which would “tax all sources of income,” would be a “more left-wing” measure than a regressive value added tax, which hits lower incomes harder. But in fact it is well and truly the MEDEF, the main association of French bosses, which is rubbing its hands in glee. In a well-managed shadow play, the bosses are pretending to accept a very slight increase in employer contributions against the promise of an increase in the CSG tax – hence an increasing shift away from the financing of retirement pensions by the companies… And on the government side, according to leaked information, they are congratulating themselves on the MEDEF envisaging a symbolic increase in employer contributions in return for an increase in the CSG tax.

This hypothesis is confirmation that François Hollande does not intend to tax finance revenues to guarantee the existence of our system of retirement, based on solidarity and defined benefits, whereas a majority of the French support this system. Thus Hollande remains deaf to the alternative solutions to financing put forward over the past several months by four trade union confederations – the CGT, the FSU, Solidaires and the FO – and by several collectives of citizens, of politicians, and of students (the Retirement, a young person’s concern collective and the Retirement 2013 collective). In the absence of seeing their worries and proposals taken into account, the trade union confederations are maintaining their call for “a great day of demonstrations and all-industry strikes to defend our wages, our jobs, and our retirement pensions” on September 10.

What about hard jobs? From the beginning, the trade unions have feared another cosmetic and limited reform to take hard jobs into account. Last week, Marisol Touraine, basing herself on the Moreau report, confirmed the creation of a “hard jobs account” for workers in order to lay the basis for early retirement. The employers would have to pay an extra contribution to finance the measure, estimated to cost 2 billion euros. The workers would gain one percentage point for each month spent doing a hard job. A ceiling would be put on the number of points one could earn.

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