March 5. 2024. 1:38

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Raising retirement age means old-age poverty, Manon Aubry warns Macron

The left parliamentary group co-president Manon Aubry warned that raising the retirement age “systematically” led to a general fall in retirees’ living standards as Emmanuel Macron pushes through a widely unpopular pension reform that would see the legal age increase from 62 to 64 in France.

She warned that the majority party’s pensions reform, which she said they would push through “like bulldozers”, was a gateway to old-age precarity across the board.

The interview follows an oped the MEP published over the weekend, in which she pointed the finger at a number of EU member states, who have increased their retirement age and have seen old-age poverty rates rocket.

She found that one in five retirees is in poverty in Germany, where the retirement age is slowly going up to 67. At-risk-of-poverty rates for those over 65 in Germany stood at 19.4% in 2021, according to Eurostat data EURACTIV consulted.

Similarly, Aubry claims that at-risk-of-poverty rates trebled in the Netherlands following an increase in the retirement age, which is due to reach 67 in 2025.

Data from Eurostat shows that poverty rates increased from 5.6% in 2015 to 16.4% in 2021 – though making a causal claim, irrespective of other, broader economic realities, is rather complex.

France is one of the last countries with a legal retirement age of 62. The average age across the EU bloc nears 65.

Criticisms from across the aisle

Macron firmly believes that reform must go through if only to catch up with European neighbours and close an ever-growing deficit.

Prime Minister Elisabeth Borne also warned that the French were spending the longest time in retirement relative to EU counterparts – such that this French ‘uniqueness’ could no longer go on unaddressed.

“We are one of the countries in Europe where the proportion of 55-64-year-olds working is the lowest,” Borne’s office said, citing that 33% of the 60-64 age group is economically active in France, compared to 45% at the European level.

Yet, criticism against the bill, currently in Parliament, is fierce, with oppositions from the far-left and far-right claiming that there is no need for an “unjust” reform. So goes their argument: while there is a short-run deficit, pensions expenditures are due to stabilising at 13% of GDP in the long run, which is where they stand now in France, according to the pensions watchdog.

Even the more liberal aisle of economists has started to voice their concerns over the reform. Patrick Artus, chief economist of Natixis Bank, claims the change will have “insignificant” effects on the economy and old-age employment.

Raising the retirement age from 62 to 64 is only there to “satisfy the European Commission” and its liberal tendencies, Aubry concluded. The government argues that the deficit will reach €150 billion by 2030 if nothing’s done and that the entire pensions system is thus at threat.

French pensions reform: A problem that must be corrected?

The French government argues that its controversial pension reform, which will raise the legal retirement age from 62 to 64, will mitigate a growing spending deficit – an approach contested by experts and trade unions.