With Europe in crisis and a French parliamentary election in mid-June, François Hollande has his work cut out for him. He has to placate his supporters by advancing the left-leaning reforms he promised on his campaign, or they may not deliver him a parliamentary majority in the upcoming election. At the same time, he has to be careful not to scare investors and international creditors into taking their funds out out of the country or downgrading France’s credit.As one of his first moves in office, Hollande is undoing one of his predecessor’s more unpopular changes by lowering the retirement age back from 62 to 60. Yet as the FT notes, the reforms will only cover a relatively small group of people:
The measure will allow those who started work at age 18-19 and who have paid 41.5 years of pension contributions to retire at 60, not the minimum of 62 as set under the Sarkozy reforms of 2010. The government said more than 110,000 people would benefit. . . .But the cost is less than the €5bn originally envisaged as fewer people were eligible than expected. Mr Hollande has not unpicked the core of Mr Sarkozy’s pension reform, under which many people do not qualify for a pension until considerably older than 62. Instead he has pledged a further review of the pension structure to tackle a remaining long-term deficit.
This is exactly the kind of balance Hollande needs to strike to keep his political fortunes up: It looks good to supporters, and it makes good on his campaign promises without committing to any significant changes. Passage of a minor measure like this may reduce the political pressure to push for less affordable or less justifiable steps.Not only is this a politically savvy move; it may be at least fairly sound policy, too. People who started work at 18 or 19 and have worked 41 years or longer are likelier to have fairly demanding jobs. The case for early retirement is much stronger for these workers than for those with simple desk jobs and it is also likely that many people in physically demanding jobs would qualify for disability if they aren’t able to retire.Even so, the message will annoy the Germans and enrage Spanish, Greek and Italian politicians trying to impose tough and unpopular austerity measures in their own countries. Hollande must figure, and he is probably correct, that he can disregard their unhappiness; they will all have to deal with him whether they like it or not.At the very least, these reforms are a sign that France’s new president is not without a subtle strategic sense. On the whole, this is a good thing. This is not a time when Europe can afford stupid leaders.