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The End of Our Fine Days
We already know it for more than two decades: pensions will absorb more and more of our prosperity because of the sharp rise in the ageing population.
Expectations are that the average life expectancy in the advanced industrial countries will increase by one year every decennium. This ageing process has a major impact on the affordability of the welfare state. Without any interventions, the current government policy won’t be tenable and the costs of the European pension funds will increase considerably. Furthermore, these growing costs will have to be defrayed by less and less working people. It is expected that the number of senior citizens (65+) in proportion to the population between 15 and 64 in the EU will double in the next fifty years.
On 7 July, the Commission published a Green Paper towards adequate, sustainable and safe European pension systems, advocating the necessity of automatic pension adjustment mechanisms. Lately, politicians all over Europe have come into action. Although their answers to this imminent problem are coloured by different ideologies, all of them agree on one point: we will have to work longer.
In France, Sarkozy’s government wants to gradually raise the retirement age from 60 to 62 by 2018. The deficit of the French pension scheme is expected to amount to 32 billion euros this year. And with an unchanged policy, this may run to 45 billion euros in 2018. Now that France is forced to reorganize its finances under pressure of the financial markets and of the European Commission, the pensions can no longer be kept out of range. According to Labour Minister Eric Woerth, the government ‘has taken her responsibility’. Backed up by president Sarkozy, he declared that the pension reform is the right answer to avoid financial deficits in the future, which eventually would erode the social services.
However, touching the age of retirement in France stirs up ill-feeling, even if the change is quite modest if one compares with Germany (retirement age: 67), the Netherlands (67), Britain (65) and Italy (65). Earlier efforts to reform the pension scheme had to be ceased due to massive resistance. Now again, unions are fuming. Not helped by the French football team, which failed to bring the population in a flush of world cup victory to bite the bullet, Sarkozy is facing several strike actions, a reaction Les Bleus are not unfamiliar with. Over the past months, thousands of teachers, transport workers, hospital employees and postmen ventilated their grievances by hitting the streets.
Why do young and old react rather irritably to the new retirement proposal?
Politician Jean-Luc Mélenchon (Parti de Gauche) sums up the discomfort: ‘The end of retiring on a pension at the age of 60 means the end of a way of life, the end of our fine days’.
Indeed, on a weekday a sixty-year-old will no longer be able to loaf about the promenades with a glass of cognac in the hand, heading for a play of jeu de boules. However, there seems to be no alternative. Within some years, a decreasing working population will have to finance an increasing group of pensioners. The social dividing lines will revolve around age. People who were subjected to great stress during their lives, expecting their share of welfare, will be confronted with generations who will have to pay for this and who will have no perspective on the same provision for old age. The whole pension system is under pressure. Either the wine will have to be diluted or there will be no wine at all.
Whether Sarkozy will be able to persuade the public opinion remains to be seen. The retirement proposal will need to be approved by the parliament in autumn. In 2012, a new presidential election will be held. The current president aspires to extend the term of office. By then, he will have to tackle his downswing in the popularity polls. Soon, we will know whether Sarkozy, whose political campaign of 2007 is currently under investigation due to possibly illegal financial contributions, will give in to the pressure of political strategy.
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