Ihe French government has defined the principles of a pension reform: raising the legal retirement age to 64; accelerated transition to forty-three years of contributions to benefit from a full pension; taking into account long careers and arduous work.
It will not be a question here of debating the need for this reform nor of its more or less fair character, but of underlining two aspects: firstly, its inadequacy, given the deficit in the employment rate of the 60- 64 years old and the lack of training and retraining measures for older employees; secondly, its inability to ensure the financial balance of the private sector pension system beyond 2030.
We know that a key problem of the labor market in France is the too low level of the employment rate (ie the proportion of the population aged 15 to 64 who is employed). This rate was 67.2% in 2021 compared to 75.8% in Germany, 74.7% in the United Kingdom and 75.4% in Sweden, for example. If France had the employment rate of Germany, tax revenues would be about 13% higher and, with public expenditure unchanged, the budget would show a surplus of 1.5 points of gross domestic product (GDP), instead of a 5 point deficit!
Naivete
The insufficient employment rate in France is not only due to the underemployment of seniors (over 60): it explains only 7% of the total employment rate gap between Germany and France ; 35% of this gap is explained by the gap between youth unemployment rates (15 to 29 years old), and 25% by the gap between adult unemployment rates (30 to 59 years old).
The government estimates that the pension reform as calibrated will increase the employment rate of people aged 60 to 64 by 6 points. This corresponds to an increase in the overall employment rate of only 0.8 points. The proposed reform therefore only very partially solves the problem of the low employment rate and therefore of productivity in France.
The variable that best explains the differences in employment rates between OECD countries is not the legal retirement age, but the skill level of the labor force, measured by the “Piaac” survey (Programme for the International Assessment of Adult Competencies) of the OECD. It can thus be estimated that if France had the level of skills of Germany as measured by this survey, the overall employment rate there would be 5.2 points higher, and the employment rate of 60-64 years of 9 points. The lack of skills in France, including older employees, explains the employment rate deficit much better than the legal retirement age.
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