Reforms to the current retirement provision and pay-as-you-go systems are essential to France’s future prosperity and economic status, no matter who wins this year’s presidential elections, warns the Mouvement des Entreprises de France (MEDEF), the French employers federation.
The warning came at a special congress held in Lyon, last month, at which MEDEF unveiled a series of demands and recommendations that it said the future president and government should consider in light of current demographic and social changes.
“We are not aligned politically,” says Béatrice Mottier at MEDEF’s national office in Paris. “What we care about is the future prosperity of the country and as representatives of more than a million companies, of all sizes and all sectors, we think that this year’s presidential candidates should listen to what we have to say.”
Mottier says that MEDEF has not modified its proposals for a shake-up in the French retirement provision system, which, if unchanged, will lead to a situation by 2040 whereby there will be just one employee per pensioner compared to today’s 2.2 per pensioner. “The financial and social implications of such a scenario are catastrophic. We need to act now to be able absorb the huge financial burden the ageing population will have on the economy, and to ensure that people have adequate provision when they retire,” Mottier comments.
MEDEF believes the 35 hour working week, lower employment costs, heavy taxation and union legislation are areas that also need reform and that these areas affect the development of the private and occupational pensions industry in France.
Mottier says that whilst the Caisse de Retraite pay-as-you-go system is fast becoming inadequate and obsolete, the new pensions landscape doesn’t have to be based on the Anglo-Saxon model. “We are not demanding that a UK or US style pension fund system be adopted as the main retirement provision tool in France, although our new retirement system structure does contain areas permitting the creation of pension funds, but what we do see as crucial is education at grass-roots level. We need to inform people that the Caisse de Retraite is simply not enough. They need to start saving by other means. And this is the message we want politicians to start putting out, whatever their political leaning.”
Essentially, MEDEF would like to see in place a system that protects purchasing power to stimulate the economy and keep French companies competitive. And it would like this achieved without having to reduce current pension levels or forcing higher contributions levels among younger generations.
One way forward is to implement a gradual raising of the pensionable age within 23 years in line with improved life expectancy. MEDEF believes that people could carry on working longer as advances in medicine and social conditions mean people are living longer. If the pensionable age isn’t raised, MEDEF warns that there will be a 40% increase in the number of pensioners in France between 2005 and 2040.