Macron’s Bad Math

For every retiree in France, there are 1.7 people in the workforce. In 1970 the ratio was one to four. By 2100, the number is projected to be one to one. Ostensibly in response to this looming crunch, on March 16 President Emmanuel Macron used a constitutional lever to push through a pension reform plan that raises the basic retirement age from sixty-two to sixty-four. The fallout has been dramatic: millions of protesters of all ages and across unions, garbage fires on the streets of Paris, blocked highways, and alarming police violence during the protests.

Macron and his defenders have called the reform a necessity. “There are not a hundred ways to balance the accounts,” he said in a televised interview on Wednesday. But one group of voices has been missing among the commentators advocating for the change. “You won’t find many economists defending this reform,” says the economist Mathieu Plane, who works at the French Observatory of Economic Indicators, a research think tank associated with Sciences Po.

On Friday Patrick Artus, a well-known economist who currently works as an advisor to the French bank Natixis, told me that the government has several tools at its disposal to confront the problem of an aging population. They could push to increase workforce participation among young adults, which remains lower than that in other European countries. They might increase taxes. “The government has a complete block on raising taxes,” he says. “And yet there are some tax increases that would be legitimate.” Other economists have suggested increasing social contributions or reducing the size of pensions for wealthy retirees.

Instead the government has forced forward a law that many economists consider both inequitable and ineffective. The change in the retirement age will have its starkest effects on workers who began their careers early. This means that the lower middle class, who tend to start working at younger ages, will be particularly affected. Despite certain exceptions for jobs considered particularly difficult or long, members of the middle class will have to work longer than their wealthier peers, says Plane. “It’s not penalizing the hardest jobs, but it’s penalizing the middle class,” says Artus.

The reform also burdens older workers, many of whom face workplace discrimination and cannot find jobs, even when they want one. “It’s a pretty brutal measure,” says Camille Landais, chairman of the French Council of Economic Advisers and a professor at the London School of Economics. “It’s not necessarily the most effective way to get people to work more, doesn’t necessarily get the right people to work more, and has very, very unequal redistributive effects.” He noted that it will affect a segment of the working population that has a lower life expectancy in retirement. This inequality explains some of the anger against Macron, who cannot shake the reputation that his work as an investment banker and his tax cuts have given him as a “president of the rich.”

As written, the reform also exacerbates other social inequalities. Women’s pensions were already 40 percent lower than those of men, and the new plan will on average make women work longer before retiring. Claire El Moudden, who studies retirement at the University of Caen Normandie, told me that “the initial inequality will be amplified by the pension reform.”

Meanwhile it prioritizes those who are already retired. The average pensioner in France is better off than the average worker, says Plane. An initial, much broader reform introduced in Macron’s first term proposed simplifying the complex French retirement system—made up of some forty-two separate profession-specific plans—to one based on points. At that time, Plane told me, “Macron explained that it was necessary to rebalance the standards of living between retirees and workers.” But that plan was shelved in 2020. Two years later “pensions increased by more than 5 percent,” Plane said, whereas wages did not. He noted that much of Macron’s support in the most recent election came from elder voters.

A number of economists have questioned whether the reform would do much to solve the larger issue, which is that the population is aging and productivity levels do not balance the cost of demographic change. By making older workers work longer, the reform will only raise the employment rate by about one point, says Artus, even though France’s employment rate is about nine points less than, for example, Germany’s. This will not necessarily save the state much money in the long run. “There is a real uncertainty about the deficit of the French pension system in 2030,” Artus says, but the reform is poised to “only bring in about 10 billion euros” then—not enough to close the gap if productivity remains relatively low.

Economists also regret that the reforms were shoved through quickly. “There is unanimity among economists that the projections [used by the government] lack transparency,” El Moudden says. The government has said that the reform will raise the minimum pension to 1,200 euros a month for a certain number of people, but that number has fluctuated between about 2 million and 250,000. “There was almost a form of amateurism, there’s no use denying it, a real lack of preparation on the figures,” Landais says. Several of the people I talked to noted that, while retirement is an important economic question, the system isn’t in immediate crisis, and the projected deficit is relatively small. And the reform’s major effect, increasing the working age, was already on its way. Due to an earlier change in the pension system, the average French person retires at around sixty-three; this number was projected to rise to sixty-four by 2040.

If the reform’s long-term prospects of solving the pension deficit are limited, its short-term political costs for Macron are high. The text of the law is currently being revisited by the French Constitutional Council. Meanwhile protests have continued across the country; on Thursday alone a million people demonstrated nationwide to demand the plan’s repeal. A planned visit from King Charles III—important to the country’s diplomatic relations—was postponed after images circulated of fires in the street. “It’s a lot of disruption,” Plane told me, “for not that much.”