Lhe Social Security financing bill, which was presented to the Council of Ministers on Monday, September 26, does not contain any provision concerning pension schemes. The executive, however, continues to insist on the need for rapid reform despite a united trade union front.
While the reform proposed during Macron’s first five-year term was intended to be systemic, it is now about parametric measures, such as those presented under the presidencies of Chirac, Sarkozy and Hollande. The reports of the Pensions Orientation Council (COR) are supposed to create a consensus on the diagnosis.
The latest report largely succeeds. Social partners and the executive agree on the long-term evolutions forecast by all the economic scenarios in the absence of a new reform: a relative maintenance of the purchasing power of average pensions, but their drop compared to the wages of working people ; increase in the effective retirement age due to the measures already decided (forty-three years of contributions for the 1973 generation) and the increased qualification of workers; stability of the life expectancy at retirement of new pensioners until 2040 (provided by the model of the Ministry of Health, dubiously named “ANCETRE”).
The difference in reading relates to the financial state of the plan. To assess it, the COR uses a very large number of assumptions. And again, it is impossible to anticipate shocks: no scenario in the COR’s 2019 report predicted a surplus in 2021 under the dual effect of a strong economic recovery and tens of thousands of retirees dead from Covid-19.
The hypotheses are constructed on the basis of numerous works and broad consultations, in particular of a whole panel of economists (including the author of these lines). This leads to multiple scenarios. Like its predecessors, the executive retains the forecasts of the central scenario to argue for a clear deficit in the pension system by 2032: 0.7 points of GDP (at constant state effort). The central scenario uses long-term hypotheses (growth in productivity, decline in the active population, drop in the salaries of civil servants, etc.) that can be described as reasonably pessimistic. And in the short term, it sticks to Bercy’s forecasts.
Coherent argument
In order to ensure the junction of these two temporalities, the report of the COR is obliged, for the first time, to imagine an unusual central scenario. The unemployment rate is an important parameter. The COR retains an unemployment assumption of 5% in 2027, France posting full employment by this horizon in its stability program. However, the medium/long term target is 7%. The COR thus proposes a completely ad hoc curve with an increase in unemployment between 2027 and 2032! It is this rise in unemployment that generates half of the hole in the regime in 2032.
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