According to the government, this “pension reform is essential for our country, to restore the accounts of the system” and Bruno le Maire estimates that the positive impact would be 0.2 points of GDP, ie more wealth created on growth.
>> Pension reforms: behind the scenes, François Bayrou’s answers make people cringe
This calculation is simple: by increasing the number of people who work longer, we produce more, this makes more contributions and therefore money that goes into the coffers of the scheme according to the latest report from the Pensions Orientation Council (Horn). For example, raising the legal age from 62 to 64 would bring in 10 billion euros per year. But that’s for theory.
In fact, working two more years would not pay as much because there would also be additional expenses, hidden costs. Several studies have looked at these negative effects, which economists call “spillover effects”.
Almost one in two French people who retire are unemployed, on RSA, unemployed, or on sick leave. If the government raises the age, nothing says that these seniors will find a job. As a result, for them, it will be necessary to extend the payment of unemployment benefits, RSA, disability pensions by the same amount. According to a report by the Statistical Service of the Ministry of Health, if in 2019, we had gone from 62 to 64 years, disability pensions would have increased by almost two billion. And if people stay working longer, it is also necessary to plan for sick leave expenses, more numerous at the end of their careers, ie almost a billion euros. In total, expenditure on social benefits would have increased by more than 3.5 billion euros.
Finally, we are not all equal in the face of this decline in age. It is above all women and workers who would be the most penalized because they are the ones who, at the end of their careers, most often find themselves in precariousness. The risk will therefore be that they stay there even longer before switching to a pension plan. This is what makes unions say that government reform is unfair and inefficient.
The executive does not agree and, despite these hidden costs, he maintains that the benefit for public finances would be far greater than the expenses.