Instead of going to rest at Bregançon or at Marrakech, French political leaders would have been better inspired to go to Sienna. Inside the Palazzo Pubblico, they would have been able to admire the Ambroggio Lorenzetti large fresco, the Allegory of the good and of the bad government. On the wall located at the right of the central panel where are sit the Ministers, is represented a peaceful and prosperous city where happy inhabitants are walking, located in the middle of a campaign where fields are well maintained and where olive trees are growing. On the left, to the contrary, violence is breaking out on the streets, houses are burning and they are fights on the nearby hills whose trees have lost their leaves. The spectacle France gives for a year makes us to remind the fresco bad government panel because the social crisis started with the yellow vests movement which amplifies itself with the rejection of the pension reform project is the straight consequence of the political mistakes made by the government.
Yellow vests baptized themselves because they were wearing equipments whose visible presence became mandatory in every vehicle. They gathered in the thousands of traffic circles which were built to slow circulation. They had already protested against the reduction of speed limits under 80 km/h. Their exasperation came to a peak when were announced massive tax increases on diesel fuels when the State for years was inciting them to choose that kind of fuel to reduce, as it was thought, CO2 emissions. Outside of major agglomerations which are equipped with collective transportation, the car is the only possibility to move. It is because it had ignored that reality that the government has to cope with the most serious political crisis the country has known for more than ten years when the young revolted against the instauration of special rules to be apply to young employees.
The lessons have not been taken and the pension reform project has boosted the discontent. It also had been conceived through a technocratic bias without taking into account the concrete consequences on the situation of concerned people, being based on three abstract principles, justice, universality and equilibrium. It starts with denouncing the advantages offered by special pension regimes to employees of public services in transport and energy. But these ones are not paid in relation to their real economic usefulness because their employers are not keeping inside the enterprise the whole value they create. A house or a flat in a city being on a TGV line has a value two or three times higher than elsewhere. In a small add, outside of a large city, the main selling point is its proximity to a train station. Office buildings in La Défense would be empty or wouldn’t have been built without N°1 subway or TER A lines.
Current disorders caused by working stoppages show very well the strategic importance of these equipments and the essential role of these who are making them working. The social pact agreed with them is based on the acceptation of wages without any link with their real economic usefulness and the availability constraints to which they are submitted, which is the same for those who come urgently to restore power in case of a break, against social benefits including notably pension advantages. It is the specific regimes foundation. So they carry no unfair character and are perfectly justified. It is absurd to set a part of the population against them, who is very happy, thanks to them, to arrive on time at their workplace, to go to vacations or to reconnect power, especially when we know they represent only 2% of the pensioners to whose it must be added 1% to take into account benefits given to their partners after their death. The weight of the specific regimes is marginal, 15 billion each year i.e. less than 5% of the total pensions. Was it worth putting the country in a stoppage?
The universality concept is quite also devoid of any reality but has heavy financial consequences. Jobs, working conditions and qualifications as the access to professions are different and frequently regulated. Pension benefits are rightly adapted the variety of situations. So universality is an illusion and the first discussions show it well with the concessions accorded to the Opera dancers and to air traffic controllers. The system based on points creates in addition uncertainty. It is the whole difference between a defined benefits system where we know, as soon as we contribute what we will receive and a defined contribution system when we know how much we contribute but where we ignore how much we will receive because it will depend of the value of the points which will be determined by the State. Moreover, the taking into account of the full professional carrier will mechanically generate a reduction of the rights compared to the current situation where the best 25 years and the last six months for civil servants are used as a basis. So the proposed system, which is adding itself to other reforms increasing precariousness (unemployment rights, labor laws) will open new perspectives to pension funds.
The priority given to the coming back to equilibrium with the apparition of the “pivot age” also shows that behind these general and apparently generous ideas predominates the financial preoccupation the government since the beginning of the discussions was trying to hide. It is based on forecasts, inaccurate by nature, to deliver an alarmist message and to demand sacrifices. So, official documents published during 2018 autumn were stating, for 2019, a coming back of the general regime and the special old age Fund to a deficit inferior to one billion compared to total benefits above 300 billion. The real deficit will be, in fact, near 5 billion, but its cause lies in the decisions taken to put an end to the yellow vests crisis (overtime hour tax exemption, reduction of the general social contribution) which the State did not compensate. The government is imposing a delay of the age retirement in justifying that by the extension of life expectation. But the unemployment rate is increasing with the age and to force people to work longer is absurd and unfair since there are no more jobs.
The different pensions systems have at their disposal important reserves. The wealthiest, by the number of contributors is the Bank of France one, which has accumulated 5 billion, the equivalent of benefits paid during ten years. AGIRC-ARRCO has more than 65 billion in its coffins producing as revenue two billion every year. The Pension Reserve Fund, managed for the State by Caisse Des Dépots, has itself 36 billion. As a total, they represent 160 billion coming mainly from employee contributions. Their uneasiness is understandable when, under the arguments of universality and justice, the State proposes in fact to appropriate them through the suppression of the regimes which collected them. All that will contribute to increase more the anxiety feeling already generated by the growing precariousness of employment and the social protection downturn. These phenomena generate precaution savings which are harming growth and so employment.
Fortunately, France is not going through a period of civil war, like the one we see in the Sienna fresco. But the lesson must be learnt. To govern is a real job.