Fatalism, a characteristic of our country: one in three French people considers the country’s decline to be irreversible, according to French Fractures Study of the Jean-Jaurès Foundation published in October 2023. What is surprising in a society where the President of the Republic himself, at the time François Mitterrand, claimed in July 1993 that “in the fight against unemployment, we have tried everything”? The idea that politics cannot influence reality has continued to spread, like a venom paralyzing public action. And yet, a few kilometers from home, peoples of die-hard reformers are still resisting impotence.
The effort first requires a clear, long-term diagnosis: in Italy, Sweden or Canada, it is on the brink of the abyss that governments have developed major reforms, called upon to transform their country from sick to model. Above all, it requires unwavering political will, beyond bureaucracy, lobbies and those who think that any change in practices is impossible. At a time when the new government led by Michel Barnier is highlighting, even in the titles of its ministers, “simplification”, “partnership with the territories”, “food sovereignty” or “academic success”, as so many promises, we can only advise them to take a look at what works elsewhere.
It is an open secret: the latest pension reform, adopted with great difficulty in the National Assembly in 2023 and which raises the retirement age to 64, is already obsolete. In the medium term, the French pay-as-you-go system is structurally in deficit, if we are to believe the latest forecasts from the Pensions Advisory Council.
An eternal soap opera that undermines French political life, has made and unmade ministers for decades. In Europe, one country has emerged from this deadly round: Sweden, more than thirty years ago now.
A two-stage rocket
It is only at the bottom of the pool that one can kick to the surface and avoid drowning. Before that, one sinks. On September 16, 1992, Sweden hit rock bottom. While the crisis in the European monetary system hit the entire continent, the kingdom was swept away by an unprecedented financial crisis. To protect – in vain – its currency, the country’s central bank, the Riksbank, raised its interest rates to… 500%! In reality, the country has been dancing on a volcano for months: real estate crisis, bank failures, drifting public accounts, huge trade deficits… The country’s public deficit is close to 11% of GDP even though compulsory deductions represent almost 50%. The financial markets, always on the lookout for easy prey, have found the ideal candidate. With a knife to its throat, the paradise of social democracy decides to overhaul its precious welfare state that it can no longer afford.
At the heart of this overhaul is the dusty pension system, which successive reforms have never managed to sustainably get back on track. Instead of the traditional distribution model, split between many funds, Stockholm has chosen a two-stage rocket: a universal scheme spiced up with a second level of mandatory capitalization.
The universal system? Well, well, that reminds us of something. In 2017, the young President Macron was elected on the promise of a systemic reform with a catchy slogan: “One euro contributed offers the same rights, regardless of status”. Except that political battles drowned out the message and the 2017 project, simple and transparent, was transformed into a technocratic nightmare. It will be buried at the time of Covid. The difference between what was imagined at the time and the Swedish reform? Rather than a points system, Sweden opted for a notional account system.
“To put it simply, the level of the pension of the person who liquidates his rights is adjusted with the evolution of life expectancy at retirement of his generation. The higher the life expectancy, the lower the level of the pension. A form of automatic piloting which allows the question of the financial viability of the system to be avoided”, explains Hervé Boulhol, economist and specialist in these subjects at the OECD.
…but also less generous
© / The Express
The search for consensus
That’s the substance, all that remains is the form. “We wrongly imagine that the matter was concluded without difficulty. While the political agreement on a universal system was quickly sealed, the search for consensus on thousands of details took a decade,” recalls Kristoffer Lundberg, an expert on the issue and director general at the Swedish Ministry of Health and Social Affairs. In Parliament, a cross-party working group of MPs worked on it for years, hand in hand with the social partners. It was not until 1998 that the reform was finally voted on. The first pensions linked to the new system were paid in 2001. Almost ten years after the great financial crisis.
Would Sweden have made this big bang if it had not found itself with its back to the wall? “Probably not,” whispers Kristoffer Lundberg. But that does not mean that we should hope that the rating agencies or the financial markets would show France the way forward…
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