Behind the hesitations on pensions, Emmanuel Macron, the president who risked sacrificing the young for the benefit of the old?

Emmanuel Macron during a visit to the Alister training center in Mulhouse, April 12, 2022.

Emmanuel Macron during a visit to the Alister training center in Mulhouse, April 12, 2022.

©Ludovic MARIN / AFP


Is retirement at 65 (now 64?) Nothing more than an electoral totem relatively uncorrelated from the reality of the financial stakes of the French social system?

Atlantico: In the campaign for the second round, Emmanuel Macron opened the doors to retirement at 64 instead of 65, or even a referendum on the subject. Is this a sign that this measure is more of an electoral totem than a real economic necessity?

Marc de Basquiat: In the first round, the president-candidate’s strategy was simple: to resume as much as possible the program of his 2 most dangerous candidateth turn, namely Valérie Pécresse, to drain her electorate. This maneuver succeeded beyond all hope. The pension at 65 was part of the package. Two days later, a change of foot to consolidate the top marks of the left being able to be enticed by the more “social” posture (translate “economically impracticable”) of Marine Le Pen.

While Valérie Pécresse has boldly taken a demanding stance, in the absence of a more creative proposition that could gain support on the right, Emmanuel Macron runs his campaign as a pure tactician. It would be inappropriate to read more or less spontaneous background analyzes or consolidated convictions in his statements every day. In any case, he is not an economist who will enlighten you on the effectiveness of this little sentence for electoral purposes.

To what extent do reforms aimed at increasing the retirement age have a negative impact on youth employment?

A 2016 European study confirmed in the data an intuitive correlation between the lengthening of the career of seniors and the lower supply of permanent contracts for beginners. The authors summed up their findings in one sentence: “Postponing the retirement of five seniors by one year leads the company to give up hiring a young person.” Of course, it would be absurd to deduce that it is enough to introduce a pension at 50 to reduce unemployment, but one can probably agree with the observation that, against his will, prolonging the career of a worker who eagerly awaits the moment when he can take care of his own seriously. garden, grandchildren’s or volunteer activities is not a good calculation for the company.

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Conversely – and the success of the apprenticeship testifies to it – quickly integrating young people into the company has only advantages: for the young person, for the company and for society as a whole. Therefore, forcing companies by law to devote more and more of their payroll to taking in seniors who are just thinking of moving on to something else has no microeconomic relevance.

Politicians tend to stick to the strictly budgetary point of view, counting the billions saved on pensions versus those accumulated in contributions, but this is a partial analysis. An economist is also interested in the dynamics of individuals: unmotivated elderly and frustrated young people. As always, the choice of a policy has several – often contradictory – effects, the overall result of which is difficult to predict. In an election citation contest, it goes without saying that each candidate chooses a topic and beats without nuance. Caricature versus caricature …

Would such a reform risk sacrificing young people, and more generally workers, for the benefit of the elderly?

A second perverse effect of pension systems must be mentioned. A classic option, not mentioned in the debate at the time, recommends replacing the “pay-as-you-go” system by introducing a “funded” pension scheme: everyone accumulates a stock of shares in listed companies over the course of their career , the dividends paid each year are transformed into an annuity upon reaching retirement age. This dominant model in Anglo-Saxon countries has had the effect of motivating pension fund managers to demand ever greater profitability from the companies whose development they finance. The management of large companies must therefore arbitrate between the remuneration of their employees (including young workers) and that of members (including retirees through pension funds).

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Therefore, the need to finance the retirement years of a growing part of the population motivates the development of different mechanisms that compete with the natural desire of workers to “make a living through work”. Managing this balance is eminently political, which explains the rise of the theme at this time in the campaign. Older people vote more frequently than young people and one can only observe the preponderant political weight of the former, which explains why the average standard of living of pensioners has been higher than that of workers for a decade. It is not satisfactory.

What contours might a pension reform have that is right for both active and retired people? Is Marine Le Pen’s proposal to bring the retirement age back to 60 reasonable?

We need to get out of the caricature of a pension system guided by a single parameter: the minimum retirement age to apply for a full-rate pension. What is a pension system? It is an insurance against the risk of living old. Those who die early finance those who play extra time. I like to put the argument in these terms, to go beyond the simple question of budget. How does each of us see our end of life? What level of financial resources do you want? What availability for your various life projects?

At the end of 2020 I published a report with Generation Libre that we called “Retire when I want”. I have detailed some principles for defining a balanced construction pension system that is fair, simple and transparent. The first choice we made is to give everyone the freedom to retire on the date they choose, knowing that their pension will be calculated on the basis of the mass of contributions paid during their career and their life expectancy up to that date. We also explained that the inequalities observed in this period of life should no longer be compensated for by a contributory effort by workers but by an intra-generational redistributive function, that is, wealthy retirees pay poor retirees. . We also advocated the replacement of the survivor’s pension system with the principle of sharing pension contributions within the couple during the years of cohabitation.

Retiring at the age of 60 or 65, this choice can only be rationally made by the person himself. Limiting the debate on pensions to an arbitrary and authoritarian measure that applies to all is a moral and economic heresy.

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