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20 Oct, 2010 05:11

No cash for old men

France’s plans to raise the retirement age face strong opposition among the general population.

As protestors block access to oil refineries in France, thousands of fuel stations around the country run dry. Panicked consumers are stocking up on fuel despite government assertions that the country has enough fuel to last for months. The run on fuel has crippled the nation’s transportation systems, causing oil tankers to sit off shore and airports to cut their services by half. This fuel crisis is part of an ongoing series of strikes led by French unions to defeat legislation that would raise the retirement age in the country from 60 to 62-years old. So far the movement against pension reform has captured the support of workers in both the private and public sectors—including the medical, transportation, education and finance industries.

In response to the situation, President Nicolas Sarkozy has ordered that a crisis co-ordination task force be assembled to deal with the work stoppages and how they are affecting the country, but sources within his administration are saying he is unwavering in his commitment to the underlying issue. Sarkozy has been quoted as saying that the proposed reforms are “essential.”

The idea behind the legislation is relatively simple. With today’s medical standards, people in France are living between 10 and 20 years longer than they were when the current pension system was set up. If France is to continue to pay out benefits without regard to the longer life expectancies of its citizens, it is predicted that the government will create annual deficits of more than US$65 billion by 2020. In short, the government is claiming France just cannot afford the current pension system.

Addressing factory workers in early September, President Sarkozy stated, “I will not be the president of the Republic who leaves without having balanced the pension system. I am extremely determined”. Sarkozy is outspoken about strengthening France’s economy, as well as in advocating the restoration of a sense of work ethic to the nation.

Though the move is extremely unpopular across the nation – with recent polling showing 71 per cent of the general public in support of the recent strikes – Sarkozy’s pension reform bill has already passed the National Assembly by a vote of 329 to 233. The bill still has to pass the Senate before it can be signed into law, a move that is expected later this week.

President Sarkozy campaigned heavily on the slogan, “Work more to earn more.” Even before the current pension reform scenario was even suggested, Sarkozy’s administration worked hard to undermine France’s long-standing 35-hour work week. The early signs of dissent from union groups opposing pension reform can be traced back to this key issue. Comparatively, the European Union has a mandated work week of 48 hours, and the United States heralds a 40-hour work week. The idea to increase the hours, as stated by the idea’s supporters, is to give lower income earners the ability to make more money. More hours worked means more income, which in turn can increase spending potential, thus stimulating the economy. Those against the extended work week are usually higher-paid professionals who claim they are losing entitlement benefits for days off in exchange for days worked. In any case, the current law stipulates that workers in France do not work as much as their European counterparts.

A big question exists as to whether it is justified for the unions and the populous to be so incensed by the government’s latest move, or if it is an irrational reaction to self-perceived entitlement. Putting President Sarkozy’s proposal into perspective may shed some light on the issue. The current retirement age in France is 60 years old, still five years below the average retirement age for the majority of Western Europe, which is 65. Germany’s retirement age is even higher, coming in at 67. Though not part of Europe, the United States splits the difference between the European majority and Germany with a retirement age of 66. If France does pass this pension reform bill, it still does not put the country on par with the rest of the world. The bottom line: it seems that the French people are demanding more benefits for less work.

As in France, Russia’s current retirement age is 60 years old for men and only 55 for women, though the Kremlin is also looking at revamping the system and raising these numbers by 2014. However, Russia faces a different problem to France, as the average life expectancy for men in the country is less than 60. Raising the retirement age in Russia under the current system would mean many men would not live to receive their pensions at all.

As the world continues to struggle in recovery from a prolonged financial crisis, different governments are working to create systems within their countries to help them move forward. Often these efforts are unpopular, misunderstood, or at the very least they uncover a wide variance in philosophy that can divide countries as a whole.

In a twist of irony, the great French Revolution which led to the modern day political system in France also began amidst a great financial crisis. Now, the people are rising up once again with school closures, works stoppages and slow downs. It may be that this time their actions will drive their government deeper into debt in order to maintain a lighter work schedule for the individual, rather than provide for future stability.