A Critique of Sarkozy's Special Regimes Reform

Bernard Girard calls my attention to this interesting critique of Sarkozy's reform of the special regimes at the RATP and SNCF. There were reports at the time that key interest groups were bought off with special "side payments" that were not publicly discussed. New research and a report by the Cour des Comptes appear to confirm this. Worth reading.

Intergenerational Contracts

With French unemployment hitting levels not seen since 1999, the government is accelerating its announcements of countermeasures. Today we have the contrat de génération, or intergenerational contract, which promises to give money to firms to subsidize the employment of older workers who will attempt to pass on their knowhow to the younger hires who will eventually replace them.

I find myself unable to muster much enthusiasm for this plan. While the notion of apprenticeship may appeal to the tradition-minded, and the idea of passing on tacit knowledge and "feel" acquired in long years on the job may seem the soul of wisdom, I can't help feeling skeptical that this simplified image of the contemporary work process corresponds to reality in many industries. One of today's primary competitive challenges is the rapidity of technological change. Work flow in many industries undergoes constant transformation and adaptation to shifting global supply chains. Skills that older workers acquired over long careers may no longer be relevant, and the kind of training that younger workers need may be best imparted in ways other than through direct contact with older workers nearing retirement. There is something artificial and abstract about the whole notion of the intergenerational contract. Its inception probably owes less to the needs of industry and more to the need of government to find work for young people while keeping older workers employed longer and therefore contributing longer to the pension funds that must sustain them in old age. Perhaps it will work, but I wonder how much of the expected €2.5 billion a year to be invested in this plan will actually be squandered.

Retirement Reform Redux

Retirement reform in France is a bit like the peace process in the Middle East. An endless saga, negotiations over the most minute details (will women who bear children get credit for one or two extra semesters of contributions? do "long careers" begin at 17 or 18?), and in the end, not much happens. So 110,000 additional people will be allowed to retire at age 60 if they choose, and it will cost the state an additional €3 billion to be covered by a hike in cotisations of "only" 0.5 points, according to Marisol Touraine.

This is the "managerial socialism" that Pierre Rosanvallon lamented in his conversation with François Hollande, to which I linked the other day. Little bits are changed around the edges to permit the left to differentiate itself from the right. The essential vision remains unchanged. The necessary overhaul of the whole retirement system is deferred if it is even so much as considered. The whole structure of remuneration and its effects on competitiveness are not discussed. Disillusionment with the mainstream parties increases. Friends to my left chide me: "But what did you expect?"

To be honest, this is what I did expect, but I reserve the right to be disappointed. Crises are supposed to concentrate the mind. Evidently things are not yet bad enough for any real thinking.

Unions Get a Little Taste

Another of my predictions was that unions would quickly test Hollande's resolve on matters such as retirement reform. And sure enough, Marisol Touraine has indicated that the rollback of the early retirement age to 60 will be slightly more generous than anticipated, because maternity leave will be counted in the required 41 years of cotisations. The unions want other concessions, including the counting of military service. But all of this is subject to approval by the prime minister, who raises the specter of "budget constraints":

Car devant la grogne croissante des syndicats qui mettent la pression afin d'élargir le périmètre des bénéficiaires, Marisol Touraine a déjà commencé à lâcher du lest. «Les congés maternité ou de service militaire seront comptabilisés», a pour la première fois reconnu la ministre, qui est cependant restée assez floue sur les périodes de maladie et de chômage qui - c'est justement l'objet des discussions avec les partenaires sociaux - pourront être «intégrées sous certaines limites». La ministre s'est bornée à rappeler l'objectif par an de ce retour à la retraite à 60 ans (150.000 bénéficiaires) et son coût (1 milliard d'euros). «Je rendrai un arbitrage en fonction des contraintes financières», a de son côté nuancé Jean-Marc Ayrault. Bref, rien n'est calé et les discussions à l'intérieur du gouvernement n'ont pas non plus débuté.