Both sides have reason to be satisfied with the mobilization of Dec. 5. The unions are pleased that the strike received broad support. The number of demonstrators was large, though not unprecedented by French standards. The government is pleased that order was maintained, in no small part thanks to careful planning by the unions, which were able to maintain discipline within their ranks. Whether this will continue as the strike unfolds remains to be seen.
What is clearer than ever, however, is that the two sides are speaking different languages. The government, taking its lead from the investment banker-in-chief, has examined the spreadsheets and determined that the deficit of France’s 42 separate pension funds is likely to rise to more than 1% of GDP by 2025. In their view, this is unacceptable, and the only way to deal with it is, first, to “rationalize” the system by combining the 42 separate caisses into one–they call this the phase of “social reform”–and then to phase in, more or less gradually, rules changes to slow the outflow of cash–“budgetary reform,” which is precisely what the strikers fear is the real purpose of the entire exercise, which in a sense it is.
The strikers, on the other hand, see what one of them called “the world’s best social model” and a government out to “destroy” it. This model is what the French like to call un acquis–the word speaks volumes. Pensions, on this view, are the spoils of war, the booty won after years of bloody struggle in the trenches. This is not a false image, though to the managers with their eyes fixed on the bottom line of the budget spreadsheet, it is at best a romanticized one that ignores the alleged necessity to keep the system solvent (while, conversely, the managers might be accused of ignoring other options in their zeal to make things simpler for themselves while eliminating potential political roadblocks along the way).
The result is an impasse in which for the moment dialogue seems impossible. The demonstrators have the wind in their sails, the government finds itself on the back foot, and as yet the inconveniences of transport paralysis have not exhausted the patience of the broader public.
On top of this there is a widespread desire to vent displeasure with the president. Having successfully finessed the Gilets Jaunes uprising, he has regained some of the pride that so many of his countrymen find so irritating. While they applauded his iron handshake in his first confrontation with Trump, they viewed his second encounter with the American strongman–“Let’s be serious,” he told Trump to his face at the NATO gathering–as a false façade intended to disguise his weakness at home, where he survives only because of the unique powers of the presidency under the constitution and the fact that the only political alternative is the unacceptable Marine Le Pen.
So while Trump may have been the laughingstock of the coterie of “world leaders” consisting of Macron, Justin Trudeau, Boris Johnson, and … Princess Anne, the laughingstock in France is Macron, who takes himself for de Gaulle while in the eyes of many of his countrymen he is closer to Giscard d’Estaing–a president elected by a fortuitous combination of circumstances and maintained on sufferance for fear of the alternative.
For now, however, Macron’s luck has held, and the status quo remains: a total impasse at the level of dialogue that nevertheless leaves room for the government to temporize and maneuver at the level of policy. So the pension reform will be “adjusted” and “ameliorated” in the weeks ahead, while the strikes continue, tempers fray, and the parties rearrange themselves in a desperate search for the right combination to beat Macron without handing the country to Le Pen.
Photo Credit: Lucasbfr, Paris Metro 2007 strike – La Defense, via Wikimedia Commons, CC BY-SA 3.0.
13 Comments
Macron was absolutely right to call out Trump for his deplorable “joke” about ISIS fighters. And he’s right as well on the larger question raised (awkwardly) by his “brain-dead” memo: Europeans need to reflect deeply on the failure of NATO precipitated by Trump and Erdogan, and either follow Macron toward a more robust common defense or accept bystander status or worse in the advancing Great Powers contest.
The sad thing is that Macron, who sees the global stage with uncommon clarity, can’t seem to see his way across the street at home. You can’t be a global leader without a national base more solid than his. Surely someone someday soon will channel all this social malaise into a social democratic opposition. But who?
Could it be that Macron’s luck is holding because although a majority of the French find Macron personally insufferable, they fear the chaos they know will follow if he is brought down? So while they may enjoy watching the unions and the resurgent “gilets jaunes” making his life difficult, they realize they do so at their peril. So perhaps after a few days, the fires will die down. Or at least that is my hope.
As to the government’s incremental attempts to reform the pensions system:
First, as “The Economist” podcast on the strike pointed out yesterday, the reforms are of the rules at this point, not the payouts. Although the unions have to encourage paranoia on the part of the public to remain relevant as defenders of “les petits gens” –and therefore emphasize that sooner or later the government will “rob” them of what is rightfully theirs –whatever the state of the country’s capacity to pay for pensions going forward is.
Second, the system cannot pay for itself, and adjustments will have to be made, sooner or later, as you point out and everyone knows. To say (as the polls indicate a majority of the French do), that they don’t trust the government to enact reforms fairly, is the sign of a country that is living in a fool’s paradise. More taxes on the wealthiest will not solve the coming insolvency of the pension system, and any government that might follow Macron’s would have to admit that, sooner or later. (Although Jean-Luc Melenchon would probably create an oratorical smoke screen around the fact, as usual.)
Third, the complexity and inefficiency of the “Code du Travail” adds unnecessary administrative costs –but also explains the backlash against its reforms because the complexity conceals from larger view telling aspects of the Code’s structure, to wit–
–Fourth, that there are special regimes in the Code for groups like the “cheminots” that have no basis in economics, but are “sacred” to the membership, notwithstanding their costs to their “concitoyens”. Apart from the “cheminots”, most French retire at 60 rather than 62 anyway, having accumulated enough points to do so by then, so everyone is in on the game. Further, women who have three or more children can retire at 57, to note another special regime (which at least has the benefit of making France the country with the highest rate of natality in the EU).
. No wonder talking of work and money is a taboo in French society –no one really wants to see brought to light their own little boondoggle. So reform of the rules is threatening because the disinfecting light that must necessarily be shone on the Code du Travail exposes everyone’s special interests.
Fifth, although the percentage of French who belong to unions is 8%, the unions’ strikes are proxies for the general disaffection the French feel before the bumpy reality that “les trentes glorieuses” are over and the new reality to which Macron is attempting to get the country to adjust. The French are fickle and do not like their leaders: at best they ignore them. Macron has had the misfortune to have been lucky in his election, but not excepted from the scorn of his countrymen which the French demonstrate towards all their leaders except those assassinated or long-dead.
In the battle to reform the “Code du Travail” and the pension system, there are going to be losers and winners, as there always are when reforms happen. For every “cheminot” fighting to maintain his boondoggle, there is a small business or an idea for a small business, struggling vainly to get off the ground. The “cheminot” fights for his privileges, but gives back what to help the unemployed 18-25 year old? Revolutionary spirit, you might say –but you can’t pay the rent with that, or create employment.
The first effects of the strike aside from the photogenic images of torchings of property, include an effect on small businesses driven by information technology: the owner of an apartment who wants to let it out on airbnb faces cancellations from foreign clients who cannot get to their destinations because the trains and planes are not running, thanks to the strikes. That apartment owner pays a woman to clean the apartment who might otherwise not have a job. It’s early days yet, but it the “manifs” continue, there will come a point where there is no turning back, and Macron’s government will fall. Macron will sort himself out, but “les petits gens” who supported the strikes will find they won a pyrrhic victory.
That perception, if held by enough French, may prevent the strikes from building further; but if they do, “sauve qui peut”, because the follow-up of the fall of Macron and his government will not be pretty. It is too simple to tar Macron as you have done by calling him “the investment banker-in-chief”. He worked at an investment bank for two years, not twenty. That’s a cheap shot. Macron may be may be arrogant, but who except an “arrogant” would dare to think he could reform France in the first place?
Bravo for a most lucid analysis.
Well stated.
As I write, the government has started to walk back some of the reforms it was planning. The unions will remain on the war path and will want to extract capitulation or close to that for the simple reason that President Macron made a terrible mistake by ostensibly ignoring them over the past half of his mandate. That is so to speak a given.
On the special regimes of social security and their deficits, the issue is actually not that they give special privileges to the professions concerned: some of them do – eg police, army, transport -, some don’t. The major deficits in these special regimes that are expected in the future are due to the demographics of the professions concerned. This is easy to understand with this extreme case: consider mining. There are hardly any mines remaining in France, thus there are hardly any miners contributing to this regime. But there used to be many mining and miners. Thus there are many retired miners. Because mining is a special regime, the deficit shows up instead of being hidden in the normal regime. Is the answer to cut drastically the pensions? Obviously not: you don’t condemn people to starving because the activity they had is disappearing. At least not in a decent social market economy such as France. The rest is politics.
Thanks, very useful.
In response to Bernard’s observation: I could not agree more with his statement: you don’t condemn people to starving because the activity they had is disappearing. Reducing the payouts to those already retired is to kick those who worked all those years at their weakest point.
However, reforms of the system that would affect those not yet about to retire is certainly possible, and the only forward.
If the reform is done with enough time for people to adjust, behavior will change. In the U.K something similar was done, as people realized that the pensions would not provide enough to live on in retirement. There, as many as could, bought their homes (at all levels of the market), with a view to selling them (or renting them) to use that to bolster their retirement. In the United States, everyone knows they cannot retire on Social Security, so most people take steps to fund IRAs, Roths, and similar instruments –even if they do not make investments in bonds or stocks
It’s not politics to point out that the system is going bankrupt, it’s seeing the situation for what it is. I don’t suppose France hopes to become the next Argentina, a country whose social benefits were so broad that plastic surgery was covered –with predictable results. If France was as rich and as small as Norway (which will not be so rich forever, either), there would be time to dilate upon the values that must be upheld; and, over decades, institute substitutes for the present system. France is neither as rich nor as small as Norway, so without imminent reform of the pension system there will be a slow decline, a sad denouement for a country so wonderful in many ways.
Something like 30 years ago, I was amused by predictions of social security bankruptcy within the next 50 years unless France shifted to a funded pensions system. This was supposed to be due to an inevitability stemming from demographic trends. Being somewhat mischievous, but also knowledgeable about demographic modelling, I made a conference for the insurance industry – I kid you not – where, instead of projecting French population over the next 50 years, I went one whole century forward. I remember concluding my presentation with the soothing words that environment concerns would likely be resolved as the population was going to halve. Another conclusion could have been that the demographic projections presented by the official commission of the day (I forget, like every one, the name of it’s Delevoy) had the same status as the projections of the first great French demographer (I do remember his name, but I am kind) who predicted in 1930 that the population of France in 1980 would be 30 millions or so. This naturally reflects a specific French obsession about population ever since the slaughter of the first World War. Other amusing exemples include World Bank world population projections 50 years forward (check out those from 1960, you will be amused).
The reason for this is that the slightest error regarding birth rates -and we still do not know how to explain birth rates, precisely – compounds into massive errors over time. It is like compound interest, which most people and all politicians have not the faintest idea about.
The moral of this story is that these 50 year projections are purely illustrative and really simply reflect the politics of the day.
Oh, and I recall vividly early in my career in 1979, how all French car manufacturers were all going bankrupt within 50 years, so why not sell them right now to large foreign car manufacturers. (This is a true story, I have found out that there no need to ever fantasize or BS as reality is so much more amusing).
I am prepared to bet – though I won’t be there to witness it – that our soon-to-be-bankrupt system will still be standing in 50 years. The reason: the French population likes sharing collectively, it’s not keen on 401Ks which do so well during financial crises.
Thanks.
–And the French generals saw no need to stop using horses in World War I.
@anonymous hiding behind his/her anonymity to sound insulting: you quite simply don’t know this subject, you might want to read prior to repeating soundbites.
France under Macron may be the vanguard for political change in the West along the lines that the Thatcher-Reagan governments paved the way for the international rise of neoliberalism and oligarchic wealth throughout the world.
France despite its wealth, and it has some of the wealthiest people in the world, has a system that keeps their power and influence in check. Instead of oligarch funded astroturf movements, puffed up by the media, to derail Obamacare, France’s affection for solidarity and fraternity mean the movements that steady politics between elections are labor or people led. Even the small business led blockades last week of fuel depots in protest against a reduction of tax subsidies for non-road use diesel, spring out of this tradition. The genesis for the gilets jaunes movement was France’s about face on diesel fuel; while city folks were oblivious to the cost of promoting a clean economy, (including slower speed limits on departmental roads) rural folks saw the value of their diesel-fueled vehicles collapse, their operating costs rise, and their freedom of movement affected. So there is an urban/progressive vs. rural/traditional divide. The good thing is France, unlike the UK and the US, has pursued policies that result in France, despite lots of doomsaying, having maintained dynamic, inhabited and agriculturally vibrant countryside.
One cannot overstate the effect of the collapse of the traditional left and right in the last set of elections. Macron was elected and created a majority political party out of thin air. It has maintained its coherence and has moved from reform to reform, albeit with give and take. Last year’s labor and unemployment reforms were legislated after months of consultation with stakeholders (in France stakeholders are a real thing, not just political eyewash). These consultations were preceeded by strikes and manifestations as we are seeing now with the pension reform ideas. They are ideas because the legislation will actually emerge from the consultations. But that does not preclude the chest beating and ralle that is part of the culture.
Macron’s likelihood of receiving a second mandate is not dependent on having the unacceptable and slightly sinister Le Pen as his foe (although LePen is all in on the country’s social contract; she is just trying to work the social, relgious and racial fissures to gain power). Rather Macron’s strength comes from having created a new center that has attracted the republicans and the socialists, many of whom for the first time voted outside their comfort zone for Macron in the first round. As a young and arrogant product of ENA and the French business-government nexus, it is all to easy to label him the Rothschild banker aloof from the people. Perhaps, the outpouring for Chirac on his death took on greater resonance when considering how Chirac’s folksy populism contrasts with Macron’s image. But give Macron time to mellow; he already can navigate a ten hour national agriculural fair solo without issue (doubtful that his anglo-saxon counterparts could do more than a 5 minute staged photo op).
All and all interesting times in France.
Well observed and argued.. I always perceived the need of truck drivers to block roads to Paris to respond to Stephane Le Foll’s refusal to meet with them a few years back (to give an example of the popular mobilization the preceding writer focuses on) as a deficit in the French system, the lack of an intermediary between the government and the grass roots and the dominance of Jacobin statism. The preceding writer’s suggestion that it is a strength is food for thought. Although I do wonder how much popular mobilisation can achieve before it becomes civil unrest, if not war.