The President of France Emmanuel Macron after he managed to bypass the “obstacle” of the yellow vests, he is now confronted with the greatest challenge of his presidency which will largely judge and renew his term of office in the Presidency of France. The acceptance by the social partners of the French government’s proposed reforms to the French social security-pension system is the big challenge for the President of France and his government.
by Thanos S. Chonthrogiannis
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The history of the French social security-pension system
Artist Willem van de Velde the Younger (1633-1707)
https://en.wikipedia.org/wiki/Public_domain
After this Battle introduced the first social security pension system in France
Historically France belongs in the first countries to implement a social security-pension scheme starting in 1673 on the reign of Louis XIV (1638-1715). The then original social-security pension system of France comprised only the staff of the Royal French Navy. It was then extended to civil servants on the eve of the French Revolution, as a forced “decompression policy” of wrath prevailing in the French people.
In 1831 and after the completion of the Napoleonic Wars the French state, due to the many wounded and orphaned children of the dead of the French military in the Napoleonic wars, incorporated into its social security-pension system and the staff of the French Army. Private sector employees were included in the French social security-pension system in 1930.
The objectives of the Social security reforms in France
The French government last week launched a process of public consultations with the social partners trying to highlight its positions on social security reforms while persuading French employees that these reforms are the highly necessary that the French social security-pension system needs in order to survive in the long run.
Photo by 01.camille, https://en.wikipedia.org/wiki/Public_domain
The high degree of difficulty presented by this project of the French Presidency is that until today no President of France has carried out the social security-pension reform due to the strong large social reactions.
The objectives of the social security-pension reform and as presented by the French government are to simplify the system as much as possible with a view to optimum savings in the long term. This and always according to the French government can be achieved by consolidating the 42 existing social security-pension funds.
The French government’s proposals include extending working life by two years, i.e. from 62 years to 64 years in order to save funds from the state budget that currently state expenditure for the payment of pensions annually reaches a level of 14% of GDP (four points higher than in Germany).
In addition, the adoption of a single pension system for all workers is proposed. Pensioners are also given the opportunity to continue their working life collecting part of their pension and increase the level of their normal pension, through the social security contributions they will pay as they work.
Premiums to those who are long-term unemployed and want a few years of work to retire. If the specific unemployed find work with lower wages than those eligible the social security-pension system will subsidies the difference in their social security contributions.
The unions of workers in co-operation with the leftist opposition and the respective organizations’ and in cooperation with the yellow vests have launched a series of strikes to suspend the eighteen-month period of public consultation that has announced by the French government on the specific issue of sociality reforms.
The Proper reforms for a robust social security-pension system
First of all, we believe that the consolidation of all 42 social security pension funds into one and unique social security-pension-carrier fund will create the required economies of scale that will save resources by covering any deficits in some of these social security pension funds but will not create those market conditions that will lead to competition in order to achieve lower social security contributions and for the same level of social security and pension services as always provided.
Photo by The White House from Washington DC
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More specifically, the number of 42 social security funds is certainly very large and should be reduced by mergers among them. A number close to eight to ten big social security funds would be appropriate for the French social security-pension market since these social security funds would then be the pillars for an open market in which competition between those with a view to the ever-increasing annexation of insured in their coffers and for the same always offered social security-pension benefits would lead to a reduction in the level of the amount of social security contributions and up to a floor level.
In this case, workers’ disposable incomes would increase due to lower social security contributions for the same level of social security healthcare and pension services equally.
Every employee in this case and irrespective of his or her profession and the union of employees belonging to it will have the opportunity, based on their own working life, to choose on the basis of his interest to transfer from his existing social security fund his social security rights and contributions until then to that social security fund which will offer him better benefits with less-than-a-size social security contributions.
In addition, France should lengthen the working life of workers from 62 years to 65 and 67 years for women and men respectively (age pension limits relating to heavy and unhealthy professions should not be altered).
In such a type of age elongation the benefit to the state budget due to the increased social security contributions paid by employees and employers from the delay in the award of pensions and after taking into account the foreseen increased expenditure related to unemployment and healthcare for insured will be in the order of €47billion.
Part of this money will be able to be redirected to improve services to the elderly. But the biggest part of this money should be directed towards increasing youth employment and since annual unemployment is relatively high (9,1%, 2018 Source: Eurostat, https://ec.europa.eu/eurostat/tgm/table.do? tab=table&init=1&language=en&pcode=tps00203&plugin=1 ).
As the duration of the social security life of young people decreases due to unemployment, the time of their paid social security contributions means less revenue for the social security-pension funds and that these workers will receive smaller pensions in relation to other.
Great attention therefore to the reduction of youth unemployment, which will ensure, together with all other proposed reforms, the robustness of France’s social security-pensions system. The mother of all battles for the French government has just begun.
