Will raising retirement age solve France’s problem with employing seniors?
A quarter of France's unemployed are over the age of 50, and there are concerns that raising the retirement age – as the government wants to do with its latest pension reform – will further aggravate the problem. But research suggests this may not necessarily happen, and the number of older people remaining in the workforce could in fact increase.
Debates around pension reforms have focused on the employment of older people, which in France is notoriously low.
“France is among the countries where the employment rate after age 60 is the lowest,” said Hervé Boulhol, a senior economist at the Paris-based Organisation for Economic Co-Operation and Development (OECD).
Only 65 percent of people aged between 55 and 64 in France are employed, according to the French statistics agency Insee.
The government's proposed pension reform would push back the minimum age of retirement from 62 to 64. More people working longer means more money coming into the pension fund and a delay in payouts, thereby reducing the pressure on the system's finances.
If nothing is done, the government says the fund will be 15- to 20-billion euros in the red by 2030.
In view of the higher unemployment rates for seniors, there are concerns the reform will push more older people onto unemployment benefit.
However, Boulhol says previous reforms that raised the age of retirement have not had this impact.
“Based on past experiences, the unemployment rate of older people does not increase,” he told RFI.
In fact, the economist says there is evidence suggesting upping the minimum retirement age has increased senior employment rates.
“Maybe one of the objectives of this pension reform is to have an impact on the overall economy, to have more people working after 60."
Listen to an interview with Hervé Boulhol and a broader look into the current pension reform in the Spotlight on France podcast:
Senior employment on the rise
Pension reforms are based on economic and demographic predictions and models, and Boulhol warns it is difficult to predict what will happen with or without a reform.
But he does point to an increase in the employment rate of 55 to 59-year-olds over the past two decades, from below 50 percent to nearly 75 percent – above the OECD average.
Employment of those aged 60 to 64 has also increased, from ten to 33 percent, though it is still 20 percent lower than the OECD average.
“That's a big increase, with an acceleration after 2011, potentially related to the previous pension reforms,” said Boulhol.
Former President Nicolas Sarkozy pushed through a pension reform in 2010 raising the retirement age from 60 to 62, and the 2014 Touraine law increased the number of years of work required for a full pension from 40 to 42 years.
Boulhol recognises that raising the retirement age is just one factor contributing to the increase in senior employment. More women in the workforce over the past 20 years means an increase in the total number of people in work. People are also in better health overall and able to work longer.
But data from other countries, and from France's own reforms, show that “if you increase the retirement age, this seems to have a significant impact on the age when people take their pensions,” according to Boulhol.
Nevertheless, nearly a third of people in France retire before the current minimum age of 62, because of special schemes for train drivers, police officers and other specific jobs.
Raising the age to 64 could keep people in the labour market and contributing to pension funds for another year or two.
“This doesn't mean that all people concerned stay employed. Some people struggle,” says Boulhol.
Unequal reform
This struggle is what concerns even those who support pension reform, like MP Barbara Pompili, a former environment minister in Macron's government. She told RFI that she cannot vote for the reform the way it is currently written.
“We will have to find measures to compensate the inequalities generated by pushing back the age of retirement,” she said.
Pompili and other dissenters from her party have proposed amendments to “improve” the legislation, notably to take into account long careers, difficult jobs, and to address the issue of employing older people.
The reform legislation currently expands an index that requires companies to report how many seniors they employ.
Since 2019, companies that employ 1,000 people or more must make that data public.
The pension reform legislation would require companies with 300 employees or more to publish the statistics, and face penalties for not doing so.
Employer representatives worry this will be too much of a burden and could lead to future sanctions on companies that do not hire enough seniors.
Coercive measures needed
Labour unions say the proposal does not push companies far enough, and Pompili agrees.
"We've stopped midstream on the reform of senior employment,” she said.
The proposed index depends on companies taking part and is not coercive.
"We propose that there be coercive measures for companies that do not respect a quota of senior employees," Pompili argued, though she does not like the concept of quotas for older employees since it implies they are a burden.
“Seniors have skills and experience to pass on, that's an advantage,” she said. “It's up to us to find the right tools to transform this into a resource.”
As protests continue, the government is unlikely to back down from raising the retirement age to 64, though the details of the reform will be hashed out in the National Assembly as debates start on the legislation on 6 February.
More on France's pension reform in the Spotlight on France podcast. Listen here.