The pension reform presented by the French government earlier this week embodies a promise French President Emmanuel Macron made during his presidential campaign and reaffirmed in his televised New Year address.
According to some, the postponement of the legal retirement age in France from 62 to 64 is not only the president’s idea but is also dictated by the European Union.
“The pension reform is a specific recommendation of the Council of the EU and the government is submitting!” tweeted Nicolas Dupont-Aignan, a member of parliament with Debout la France, a far-right party, on Thursday, January 12.
The day before, Marine Le Pen, an MP with the Rassemblement National, another far-right party, described the government’s project to the parliamentary media as the result of a “form of blackmail” by Brussels.
This argument is partially true: In recent years, France has made commitments to the European Commission to reform its pension system. But one soon finds itself in a chicken-or-the-egg dilemma: Does Mr. Macron want to reform pensions because Brussels is asking him to or was the “recommendation” made because he was already willing to reform?
WHY IT’S COMPLICATED
Yes, Brussels is encouraging France to reform its pension system…
Each year, EU member states aim to better coordinate public policies within the framework of the European Semester. “If necessary, they also receive recommendations to correct macroeconomic imbalances”, according to the website of the Council of the EU.
It was in this context that the Council recommended in 2019 that France reform the pension system to “reform the pension system to progressively unify the rules of the different pension regimes, with the view to enhance their fairness and sustainability.”
This commitment was included in the French national recovery and resilience plan submitted to the European Commission in 2021. Investments made possible by the European recovery plan “will be accompanied by reforms designed to increase their impact and also support growth potential. Among other things, the reforms undertaken will improve the efficiency of housing policy, the labor market and unemployment insurance, and, when conditions allow, the pension system,” the text reads.
…But nothing formally obliges France to act
Is it fair to say, however, as Ms. Le Pen and Mr. Dupont-Aignan have said, that the project presented by Prime Minister Borne was imposed by Brussels?
As far as the EU’s economic recommendations are concerned, they are the result of a discussion between member states and the Commission and aim at achieving major common objectives rather than compelling member states.
The mention of pension reform by the EU as early as 2019 is not surprising since the issue was already on the French agenda. At the time, the government was working on a “universal” pension system abolishing the existing special schemes, which ended up being shelved in March 2020 because of the Covid-19 pandemic.
With regard to the European recovery plan, the situation was somewhat different. France, like other member states, spelled out structural reforms it planned to launch in parallel. Very clear commitments were made under the heading “milestones and targets.” For example, France set itself the target of helping 700,000 households to engage in energy-focused renovation works.
Pension reform is not one of the specific “milestones and targets” of the French recovery plan
Achievement of these objectives is subjected to detailed reports to the Commission before any request for funds can be made. Brussels can therefore assess whether the efforts of the member states are sufficient before reimbursing expenditures.
With respect to pensions, France only signaled its willingness to reform but it did not commit to a precise plan or a timeframe. There was no requirement for a postponement of the minimum retirement age to 64 to allow France to benefit from European funds.
A more realistic test took place when Brussels validated member states’ national recovery plans. At the time, the Commission estimated that France’s structural reform program was sufficiently credible to validate its plan.
There is still a political issue at stake. Although France is not legally obliged, it has made a commitment to reform pensions to its other European partners. From this point of view, European discussions help bring some reforms to fruition.
“The European recovery plan has had concrete effects and has already contributed to the adoption of certain reforms,” for example, in Italy, according to David Bokhorst, an associate researcher with the European University Institute in Florence.
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