France’s Macron faces decisive test over economic policies

Massive strikes against a planned overhaul of the pension system are sending a powerful warning to French President Emmanuel Macron. Half-way through his term, the 41-year-old centrist is still determined to push through the reform and keep remodeling the French economy.

Macron is facing a decisive test at the end of a turbulent year that has seen yellow vest protests agitate against his economic and fiscal policies.

As the anti-government movement was petering out this summer, protests against the pension plans emerged, leading to unions’ calls for a general, open-ended strike this week .

In what may look like the government’s worst nightmare, yellow vests and angry workers marched together on the streets of French cities on Thursday.

Macron considers the overhaul of the pension system, one of his key campaign promises, as “indispensable.”

The plans are the centerpiece of changes he says are aimed at modernizing France’s labor market — and a big challenge in a country with a long history of social struggles.

The current system “is not good and is not fair,” Macron said last month. “We are rebuilding a universal pension system, much fairer and accountable.”

The main focus of the reform is to unify the 42 different pension schemes into a single one — so all workers have the same pension rights. The so-called special regimes, linked to certain professions, allow workers to get early retirement or other benefits.

In Macron’s view, the measure is needed to adapt to a more flexible labor market because with the current system, increasing numbers of workers who have had several different jobs and different statuses during their career have lower pensions.

It is also aimed at making the system more sustainable, as a deficit is expected over the coming decade.

But workers fear they’ll need to work longer for lower pensions.

“This reform speaks to everyone,” political scientist Dominique Andolfatto stressed. “It’s going to have an impact on the pension level, on the retirement age, everyone is concerned.”

Last-chance talks between unions and the government will take place in the coming days. An official at the French presidency, who was not authorized to be named publicly, suggested the government is ready to accept some changes to the project.

Notably, the government may offer to delay the implementation of the reform.

Macron will decide on the key measures in the coming days.

The details, to be unveiled next week by Prime Minister Edouard Philippe, are much awaited. They will provide indications about how long people will need to work to get a full pension, and how and when those who allowed early retirement will make the transition to the new system.

Macron has promised that the legal retirement age will remain at 62, but financial conditions will change to encourage people to work longer.

The planned pension-system overhaul comes after economic measures that also prompted protests and strikes. Since he came into office in May 2017, Macron has eased rules to hire and fire workers and to make it harder to get unemployment benefits.

Critics denounce Macron’s pro-business policies as threatening the French welfare state. Yellow vest protesters accuse him of arrogance and of being out of touch with ordinary people.

All year, Macron has made efforts to change his style, trying to appear as caring more about the concerns and grievances of the French.

He conceded a package worth 10 billion euros ($11.1 billion) to the yellow vests — such as a monthly bonus of 100 euros ($111) to boost the minimum wage — and announced tax cuts to increasing purchasing power next year.

The government says labor measures have started producing results, with more jobs created and falling unemployment.

Macron’s approval rating, which had plunged to record lows when the yellow vest movement broke out, has since slowly increased. It’s now hovering around 40% in most recent polls.

The government wants to avoid a scenario like the general strikes of late 1995, whose memories remain vivid among the French. They paralyzed the country for three weeks in opposition to plans to suppress the special pension regimes, and other reforms. The government was forced to abandon its plans.

The situation this time is different, Andolfatto said, because unions are more divided than in 1995. He described protests against pension changes as an “addition of discontents,” rather than real unity.

Hard-left workers’ unions are against Macron’s plans, but some more moderate unions, considered reformists, may be open to negotiation, he stressed.

“I have an ambitious project for the country”, Macron recently said. “And I won’t give up. Because I deeply believe that France is a great country which can face the challenges of the 21st century.”