French pension reform

By Megan McArdle

The invaluable Andrew Samwick points to this story on another attempt to reform French pensions:


Nicolas Sarkozy is eyeing off the pensions of public servants.

In 1995, moves to reform France's pension system led to weeks of protests.

Now, the new French President has announced a package aimed at cutting benefits to workers like train drivers and electricity workers, who until now could retire early.

Mr Sarkozy says the system is financially unsustainable and he has pledged to negotiate with unions and companies, but he insists the new system will be implemented without delay.



He'll need more than a bit of luck. In 2003, roughly the same reform touched off a series of crippling strikes (which is still better than 1995, when an attempt to reform pensions ultimately brought down Alain Juppe, the prime minister.) That's why the train and utility workers were exempted from the last deal: for some reason, railroad unions tend to be especially militant, and both groups have the ability to bring the country to a screeching standstill. It's annoying if you can't get your driver's license renewed, but really a tad worrisome if the power to work your ventilator goes offline.

Nonetheless, he has to do something; lavish public sector pensions pose a potentially crippling burden on a government that already has quite a lot to do figuring out how to fund all that health care for the elderly. And having forced the reform down everyone else's throats, the government may be in a better public position, since now other civil servants will resent the special privilege.

This article available online at:

http://www.theatlantic.com/business/archive/2007/09/french-pension-reform/1953/