The pension reform continues to be the subject of heated debates. While demonstrations took place across France last Tuesday to challenge the lowering of the legal retirement age from 62 to 64, among other key measures in the text, the government continues to push hard for its project.
A des arguments souvent brandis pour défendre la réforme est la nécessité de résorber les deficits du système que autrement atteindraient 13.5 billion euros (par an) à la fin de la décennie, d’après le ministere de l’Economie et des Finances Bruno Mayor.
Thus, the reform would allow a return to balance in 2030. And after? Some experts are already talking about the possibility of a new reform.
The management of the pension system, “is piloting”
Raymond Soubie, former social adviser to Nicolas Sarkozy, is convinced: after this reform, another will be necessary at the end of the decade.
According to him, the current reform will not be enough to keep the accounts in the green after 2030 due to the government’s concessions in its initial project.
On the side of the two economists interviewed by BFM Business, only one certainty: there are no certainties.
This is the observation of Eric Heyer, director of OFCE’s analysis and forecasting department. He explains that the management of the pension system is piloting in sight, a gradual adjustment. And for him, everything depends in particular on the growth rate of labor productivity in the coming years, a rate that no one can accurately predict in advance.
To make its forecasts of the financial balance of the pension system up to 2030, the government used a 1% long-term productivity growth scenario that some consider optimistic. “I am not sure that we can immediately say that it is too optimistic,” says the member of the Higher Council of Public Finance. If the future belies the estimates, a reform will be necessary, believes Eric Heyer, who adds that a balanced pay-as-you-go system, or something similar, is important, but that a small deficit does not lend itself to results.
To find out if another reform will be necessary at the end of the decade, we will have to wait. Among other things, wait to know the productivity figures and the effects of the reform that is currently being discussed. “Won’t there be new crises?” Eric Heyer also wonders.
The deficit, a “subordinate” problem
It is not impossible that the system will need to be readjusted if it encounters financial difficulties, according to Philippe Crevel, director of the Cercle de l’Epargne and founder of economic research and strategy firm Lorello Ecodata. He points out that we should go from 17 million retirees this year to 20 million in 2040, which will not help the desired balance of pension plan funds. For him, however, the deficit is a “subordinate” problem.
It is mainly the lack of manpower, or in other words the employment rate, which would pose a problem according to him. If it were to increase, it would at the same time make it possible to curb future potential losses in the system. He points out that the birth rate in France, for the moment above the European average, will be gradually readjusted downwards, which will not help the employment rate. A problem that can only increase if we do not take action, explains Philippe Crevel. The increase in the working day, the resort to immigration and the postponement of the retirement age are the measures that, according to him, make it possible to remedy this.
Philippe Crevel also recalls that before tackling the issue of a new reform, the one currently being debated must pass.
Source: BFM TV
