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Pensions Reform in France : "Pensioners’ Standard of Living Now and Tomorrow Is at Stake”

Translated Thursday 3 April 2008, by Isabelle Métral

Social security: On Saturday March 29, the CGT (the French Trade Union Confederacy), FSU (the main federation for education and culture), and Solidaires organized demonstrations against the government’s planned reform.

To CGT leader Jean-Christophe Le Duigou, lengthening the time workers have to pay into retirement funds will not restore the funds’ financial balance but is sure to keep pensions down [1].

HUMA: The government is in a hurry to have done with the “2008 update” on pensions, its aim being to raise from 40 to 41 the number of years people must contribute to the funds to get a full pension, without having to negotiate. What is the CGT going to press for?

LE DUIGOU: The fact that the government and employers want to downplay the 2008 update as it was defined in the 2003 law is not to be wondered at. As trade-unionists and salaried workers, we must on the contrary make the most of the opportunity and raise the basic issues concerning the future of our pensions system for it is quite uncertain. By raising the basic questions, we shall be strictly conforming to the terms of the law which providing that the update bear on the level of pensions, particularly small pensions, the length of time workers have to pay into the retirement funds, and that the means to ensure the financial balance of pension funds be examined.

HUMA: The labour minister contends that to balance the funds it is absolutely necessary to raise the number of years to 41. What do you say to that?

LE DUIGOU: Since 1993 we have embarked on a policy that consists in lengthening the duration of the workers’ contribution indefinitely: but this does not ensure the long-term financial balance of the system. Its sure effect, through a revision of the formula for calculating pensions and the deductions inflicted when the minimum requirements are not met, will be to keep pensions down. The pension of nearly half this year’s new retirees will be calculated on the minimum contribution rate (editor’s note: 580 euro).

HUMA: According to Xavier Bertrand, the only alternatives would be either to raise contributions or to cut pensions…

LE DUIGOU: The successive governments have attempted to force this logic upon us as being the only possibility: but this is taking a narrow view of general retirement plans, as being a function of certain parameters only. One should take a global view of the question, and first of all in its relation to employment. Supposing that by 2020 the number of pensioners does increase by 50%, so to 6 million, their pensions can still be financed. Four million people today are unemployed either temporarily or permanently: if they did get jobs, half the financial problem would be solved. And then think of the 25 billion euro lost to the funds owing to the contribution exemptions granted to firms, 25 billions euro in “social niches”, namely a series of bonuses or complementary payments, share-options included, which are exempted from contributing to pension funds. We also think that the companies’ financial income should be made to contribute at least as much as wages. Additional resources can be found in these ways to balance the pension funds.

HUMA: The pensions issue is making a comeback on the political scene. The provisions of the 1993 law, which have brought about a decline in the level of pensions, seem to be increasingly called into question.

LE DUIGOU: The standard of living of today’s and tomorrow’s pensioners is at stake. It is the keystone of the intergenerational pact. If we allow the level of pensions to decline, as has been the case since 1993, young people will legitimately consider that they will not get an adequate pension when they can at last retire, and the money they pay into the funds will not seem to them to be legitimately spent. They will turn to alternative, largely illusory retirement plans, considered as being more likely to ensure the level of pension they target. It is very important that we oblige the government to go back on the indexation of pensions as it was defined in 1993 and 2003, and that pensions increase at the same rate as wages.

HUMA: In 2003, when Fillion opened the reform plan, unions were more or less agreed concerning the initiatives to be taken, then this unity fractured. Today, the CGT, FSU and Solidaires are organizing a first mobilization, whereas others, like the CFDT [2], think it is too early yet.

LE DUIGOU: It is never too early to start mobilizing. Otherwise the third leg of the pension reform will be through before workers and employees have had a say. That is what justifies these demonstrations. Five years ago, division among unions enabled the government to force its reform through. Nobody expects unity between unions right now as was the case in early 2003. But we think that workers set great store by a series of concrete objectives, like: adequate pensions, not lengthening the time one has to pay into the funds to get a full pension, real equality that integrates the hardness of the work, and new sources of contributions to meet the costs. We believe that all salaried workers can readily agree on those points, and that eventually their unity will incite unions to converge. At any rate the CGT is certainly going to plan further actions after this first demonstration.

[1See article 686 (18 September, 2007) France: Special Retirement Plans Used as Scapegoats

[2The CFDT (French Labour Confederacy) broke the unions’ united front in 2003 when it endorsed the government’s reform.

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