The French Pension Pickle
Martine Durand: Like most other OECD countries, France is facing rapid population ageing because of low fertility and longer life expectancy. This means the dependency ratio of older people - those aged 65 and over as a proportion of those aged 20-64 - will rise from 25% at present to 50% by 2050. In other words, there will be more older people, but fewer people of working age to support them. These demographic trends are putting tremendous pressure on the French pension system, which is based on what we call a Pay-As-You-Go (PAYG) distributive principle; people who are currently working pay the pensions of those in retirement. Everybody agrees that reform is necessary; if nothing is done soon, public deficits could rise by some 5% of GDP over the next 30 years. And public debt could more than double. So, without reform now, our children and grandchildren will pay the price.
These demographic trends are putting tremendous pressure on the French pension system, which is based on what we call a Pay-As-You-Go (PAYG) distributive principle; people who are currently working pay the pensions of those in retirement. Everybody agrees that reform is necessary; if nothing is done soon, public deficits could rise by some 5% of GDP over the next 30 years. And public debt could more than double. So, without reform now, our children and grandchildren will pay the price.
France: Jobs and older workers France's labour market is a two-sided coin. On one side, it boasts one of the highest productivity rates per employed worker in the OECD, yet, on the other, there are whole sections of the adult population not in work. Apart from unemployment, which is stubbornly high, the employment of older people is now absorbing considerable public attention. Mobilising these people into the labour market would not only help strengthen French economic performance further, but reduce pressure on pensions and public finances. The above chart demonstrates some of the challenges of aging populations, early retirement and longer life spans.
The OECD feels that '03 pension reforms are not proving to be as successful as intended
11/03/2005 - A new OECD report, Ageing and Employment Policies in France, notes that the pension system reforms made two years ago have had little effect. Older workers are still quitting the workforce early. Less than half of them move directly from a job to a pension. The rest move to shadowy areas of pre-retirement such as public or private early retirement schemes and unemployment insurance, from which they rarely return to jobs.
FERTILITY RATE In Europe 2.1 children per woman is considered to be the population replacement level. These are national averages Ireland: 1.99 France: 1.90 Norway: 1.81 Sweden 1.75 UK: 1.74 Netherlands: 1.73 Germany: 1.37 Italy: 1.33 Spain: 1.32 Greece: 1.29 Source: Eurostat - 2004 figures At-a-glance: National policiesWith all this, it is maybe not surprising that France is managing to buck the trend of European depopulation. With a fertility rate of 1.916, it is second only to Ireland in the birth stakes and, unlike many countries, its population is growing strongly. According to recent government figures, France's population should reach 75 million (from 62 million today) by the middle of the century, in the process overtaking Germany - whose numbers the UN says will fall from 82 million to 70.8 million in 2050...... What is particularly gratifying to French planners is that the bulk of the current population increase - put at 0.68% a year - is caused by home-grown births and only a quarter to immigration.
At-a-glance: National policies
With all this, it is maybe not surprising that France is managing to buck the trend of European depopulation. With a fertility rate of 1.916, it is second only to Ireland in the birth stakes and, unlike many countries, its population is growing strongly. According to recent government figures, France's population should reach 75 million (from 62 million today) by the middle of the century, in the process overtaking Germany - whose numbers the UN says will fall from 82 million to 70.8 million in 2050...... What is particularly gratifying to French planners is that the bulk of the current population increase - put at 0.68% a year - is caused by home-grown births and only a quarter to immigration.
According to recent government figures, France's population should reach 75 million (from 62 million today) by the middle of the century, in the process overtaking Germany - whose numbers the UN says will fall from 82 million to 70.8 million in 2050...... What is particularly gratifying to French planners is that the bulk of the current population increase - put at 0.68% a year - is caused by home-grown births and only a quarter to immigration.
