France: Millions protest against attack on pensions

French trade unions estimated that 2.9 million people participated in strikes and protest marches across France on September 23 in opposition to a push by centre-right President Nicholas Sarkozy to impose cuts to the country’s pension system. The government claimed that just under 1 million participated in the protests. However, most of France’s corporate media reported protest numbers consistent with union estimates.

The government had hoped that passage of the pension “reform” bill by France’s lower house of parliament on September 15 by a majority of 329 votes with 229 against would weaken support for the union-called protest action. The government had put participation in a similar union-called national day of action against the pension bill on September 7 at 1.1 million, while the protest organisers had estimated participation at 2.5 million. Participation in a June 24 national day of protest action on the pension bill was estimated at 2 million by union organisers and 800,000 by the government.

The government’s pension bill proposes raising the minimum legal retirement age from 60 year of age to 62; increasing the age at which workers can retire on a full pension from 65 to 67; increasing the period that workers must work to qualify for the full pension from 40 to 41.5 years; and increasing the proportion of public sector workers’ pay that they contribute to the pension system from 7.85% to 10.55% (the same amount as paid in by workers in the private sector). The projected changes to the pension system are due to be implemented in 2018-20.

Reuters reported on September 24 that, “Minutes after French Prime Minister Francois Fillon said there was no question of a government climbdown, union leaders meeting in Paris called another protest for Saturday, October 2, and a follow-up day of strikes and protests on Tuesday, October 12. Clearly heartened by large street protests for the second time in a month on Thursday, unions issued a statement saying: ‘Our organizations warn the government of the consequences that ignoring this profound expression of anger could incur’.” The centre-right dominated Senate will vote on the pension bill in mid-October.

Agence France Presse reported on September 5 that a “poll by the Ifop institute published on Sunday found that a narrow 53 percent majority found [the pension bill] at least ‘acceptable’. But support is ebbing away - the same survey found that 58 percent backed raising the retirement age in June — and 70 percent of respondents backed the labour unions’ day of action against the government”.

Across the developed capitalist countries, governments are seeking to raise the age at which retired workers will become eligible to receive state pensions. Thus, under legislative changes approved in 2009, from 2017 the qualifying age for the old-age pension in Australia will increase from 65 - the qualifying age when the age pension was first legislated in 1909 — by six months every two years until it reaches 67 by January 1, 2024.

The first country where a state old-age pension system was introduced was Germany. Facing an increasingly powerful working-class movement, led by a mass-based and the then-revolutionary socialist party, the right-wing government of Chancellor Otto von Bismarck enacted a retirement pension scheme in 1889, with eligibility set at 65 years. At the time, while high infant child mortality rates meant that average life expectancy was 50 years, a German adult would on average live to 70 years of age, a figure used in the actuarial assumptions included in the legislation.

Today, average life expectancy in Germany, as in nearly all other developed capitalist countries, is 80 years. But despite the enormous increases in labour productivity and total annual national income in Germany and the other developed capitalist countries over the last 100-120 years, the age at which workers have been eligible to receive a government pension remained set throughout this period at 65. And, over the next 15-20 years, it will be raised to 67 years.

The officially claimed reason for the projected increase is that increasing average life expectancy will cause an unsustainable blowout in government debt levels if workers are able to continue to receive state pensions when they turn 65. “With the population ageing and increasing financial pressure on old-age systems it will be difficult to finance adequate pensions if people do not work longer”, Monika Queisser, head of the social policy division of the rich countries’ Organisation for Economic Cooperation and Development, was quoted as saying by the September 27 Sydney Morning Herald.

This argument was taken up and exposed as fraudulent by SMH economics editor Ross Gittins in two articles in February of this year reviewing the Australian Treasury department’s 2010 Intergeneration Report, which claimed that as a result of Australia’s ageing population by 2050 the federal budget would suffer a “fiscal gap” of 2.75% of gross domestic product as growth in government spending exceeded growth in revenue.

Gittins observed that, “The report underplays the truth that the fiscal gap is simply the result of an arbitrary decision to cap the growth in tax collections at 23.5 per cent of GDP.” Furthermore, wrote Gittins, according to the report’s own estimates, government spending “on age and service pensions is expected to grow over the next 40 years by 1.2 percentage points to 3.9 per cent of national income (GDP). That’s a fair bit, but its cost will be offset by much slower growth in spending on the family tax benefit and childcare benefits… Overall, government spending on all social welfare payments is projected to account for no higher proportion of national income in 2050 than it will in this year’s budget.” That is, while increasing life expectancy means there will be more pensioners living longer in Australia (and the other developed capitalist countries) over the next 40 years, the steadily declining birth rate will leave the dependency ratio—the number of non-working dependants per adult worker—largely static if not declining.

Under the capitalist social order, government-provided age pensions to retired workers in the final analysis represent a deduction from the wealth produced by the working class that is appropriated in the form of business profits by capitalist firms. Any increase in workers’ retirement age or reduction in their pension payments represents an attempt by the capitalist class to increase their average rate of profit.

But cutbacks in working people’s pensions cannot be presented in such terms by the government officials who serve the interests of the capitalist class, a tiny minority of the population. Instead, these officials present the alleged pensions “problem” as though working people are themselves to blame - as a result of the increase in social wealth we have created, we’re living longer than ever before. And unless we work for several years longer before retiring, this will put an unfair burden on younger workers, who will allegedly pay higher levels of taxation. The profits of capitalist businesses are simply left out of the picture, as they try to pit one generation of workers against another.