French Strike Aims to Save an Envied, but Convoluted, Approach to Pensions In France, train drivers can retire at 52, public utility workers at 57 and ballet dancers at 42. President Macron calls the tangle outdated and unsustainable. A million French protesters disagree.

Protesters on Thursday set a fire and confronted riot police near the Place de la République in Paris.Credit...Kiran Ridley/Getty Images

NY TIMES

By Liz Alderman

PARIS — Stéphane Vardon has worked as a conductor on France’s high-speed and suburban rail network for 20 years. It is hard work, he says, and he’d like to retire before he turns 58, a privilege he now fears President Emmanuel Macron is going to strip away.


So this week, when nearly one million French citizens demonstrated nationwide to protect pension benefits that are the envy of much of the world, Mr. Vardon, 46, was among them, marching through the streets of Paris.


“People will have to work longer and have less money for their retirement,” said Mr. Vardon, citing a common fear of Mr. Macron’s plans. “Macron isn’t close to the people. We know he won’t do anything for the workers.’’


While France’s official retirement age may be 62, the actual age varies widely across the country’s labyrinthine system. Train drivers can retire at 52, public electric and gas workers at 57, and members of the national ballet, who start dancing at a very young age, as early as age 42. That is to name just a few of the stark differences.


It is this sheer complexity that Mr. Macron has vowed to untangle, aiming to standardize 42 different public and private pension schemes into one state-managed plan.


At stake in the continuing standoff — much of France remained shutdown on Friday — is nothing less than the future of the country’s vaunted social safety net.

Image “It won’t be enough to have a retirement where I can live well,” said Stéphane Vardon, a train conductor. Credit...Cyril Zannettacci for The New York Times

Elected in 2017, Mr. Macron has faced fierce strikes and street protests before as part of his attempts to add dynamism to France’s economy and make it more business friendly. But the pension overhaul is his biggest and most daunting test yet.


Unions are calling for another nationwide demonstration Tuesday, just before the government is scheduled to unveil fresh details of the pension overhaul. The transport strikes that incapacitated France this week have now been prolonged through early next week.


As Mr. Macron moves to overhaul the pension system, it is precisely workers like Mr. Vardon — those with the most generous ‘‘special schemes’’ — that he would like to address.


The country’s postwar retirement system was founded by Gen. Charles de Gaulle, who was intent on establishing a social safety net in 1946 following the liberation of France.


Amid the postwar tumult, he bowed to demands by France’s mainly Communist-led unions to let different professions control their pension plans.


Instead of a centralized system, railway workers oversaw their retirement system, as did sailors, lawyers, notaries, teachers and, eventually, even ballet dancers and actors.


Because of the arduous nature of some professions, workers could retire early, a framework that persists today.

A demonstration against the proposed pension reform in Paris on Thursday.Credit...Ian Langsdon/EPA, via Shutterstock

Mr. Macron has called the tangle outdated, unfair and unsustainable. France spends a whopping 14 percent of its gross domestic product on the pension system, more than almost any European country.

The system is staring at a potential deficit of 19 billion euros by 2025 if no action is taken, according to a landmark report issued by France’s pension czar, Jean-Paul Delevoye.


So Mr. Macron says he wants to merge the disparate systems, public and private, into one state-managed system by 2025.


He also wants to keep the deficit from growing, which Patrick Artus, chief economist of Paris-based Natixis bank, said could be achieved if every worker works at least another six months before retiring.


Whether Mr. Macron can succeed in his plans is an open question. No French president has managed to achieve a radical overhaul of pensions.


Mr. Macron says he isn’t seeking to reduce France’s pension spending — a point the government hopes will placate protesters.


Nonetheless, the changes he has proposed could alleviate the burden of some of the most generous pensions, which falls heavily on the government.


To get there, Mr. Macron plans to pivot to a centrally managed points-based system similar to one used in Sweden, where workers accumulate points over the course of their careers and cash them in.


Mr. Macron says the system would be simpler and fairer, and would create better funding security for pensions as the population ages.

Riot police in Paris.Credit...Rafael Yaghobzadeh/Associated Press


Currently, the public pension fund is a pay as you go system that works like a group insurance, with workers and employers paying contributions from their income.


Pension benefits are currently calculated, in the private sector, based on a worker’s 25 highest earning years, and in the public sector on the last six months, when workers are likely to be at the height of their earning power.


Full pension benefits are earned after 41 to 43 years of contributions, depending on when workers were born, but workers can retire earlier, although those who do won’t get full benefits.


All workers are also required to pay into supplementary pension schemes to complement public pensions, which pay retirees an average of around 75 percent of pretax earnings — among the most generous in Europe, according to the Organization for Economic Cooperation and Development.


The state would remain the main guarantor of pensions, continuing to provide workers with a safety net that is unheard-of in the United States, where about half of Americans have no access to retirement savings plans, and have little or nothing saved for retirement.


French unions say Mr. Macron’s plan is little more than smoke and mirrors and will benefit private-sector workers at the expense of teachers, railway workers, nurses, and other public-sector employees.


By valuing pensions on a lifetime of work, instead of the last six months, those in the public sector fear they will see their pensions slashed.

SNCF railway workers on strike at the Gare du Nord station.Credit...Benoit Tessier/Reuters

Mr. Vardon, the conductor, is among those worried about taking a hit. His base salary of 1,800 euros a month is enough for a decent pension under the current scheme.


But under the points system, his retirement check calculation would include the lower salaries he earned when he started working 20 years ago, so he’ll get less.


“It won’t be enough to have a retirement where I can live well,” he said.


As things stand, Mr. Vardon would like to retire at age 57 and a half, the threshold permitted by the national railway scheme.


In reality, he said, he will probably need to work until age 62 to reap his full pension. Mr. Macron’s changes could force him to work even longer — a thought that fills him with dread.

“We have difficult working conditions,” said Mr. Vardon, who assists passengers and manages work crews while maneuvering constantly on his feet as he crisscrosses the country at high speeds.

“We don’t eat at normal hours, we have short nights of sleep, which means that I am more tired and my body doesn’t have time to adapt,’’ he said. ‘‘I will age faster than someone who had a regular job Monday to Friday from nine to five.”


“Many of my colleagues died between the ages of 60 and 65,” he added, “So I’m worried I won’t make it.”


Economists agree that the biggest winners are likely to be private-sector employees. Because pension payments under the point system would be indexed to France’s nominal gross domestic product, private-sector workers will have their pensions revalued and likely revised up, said Mr. Artus.


“There will be winners and losers,” Mr. Artus said. While those losing out will face a painful transition, France’s overall pension system will be sounder in the long run, because a points system will make it easier to maintain balanced finances, he added.


A recent poll by Elabe, a French polling agency, shows that over half of French people are concerned the current pensions system isn’t sustainable. Still, the political challenges to streamlining it remain enormous.

The Gare Montparnasse train station in Paris on Friday.Credit...Thibault Camus/Associated Press


The demonstrations are likely to go on as long as the French fear their pensions might suffer or they will have to work longer under any new system. French presidents have tended to back down from reform efforts in the past in the face of fierce public resistance.

Mr. Vardon is among thousands who have vowed to continue the fight. While the demonstrations may look raucous to the outside world, “We want people to live without having to work longer to have a retirement,” he said.


“Yes, we have a good system, but we think our system should be a model,” he added. “It allows people who have accidents, who are poor, who didn’t have any luck in life, to climb the social ladder and to continue — after a long career — to live, to feed themselves, to take a well deserved rest.”


“It’s a shame that other countries don’t have this,” he said.


Melissa Godin contributed reporting.

Liz Alderman is the Paris-based chief European business correspondent, covering economic and inequality challenges around Europe. She was previously an assistant business editor, and spent five years as the business editor of what was The International Herald Tribune. @LizAldermanNYT

Greek Plan Accepts Austerity to Get Debt Relief

NYT

Only a day after grim predictions of financial and social collapse in Greece, a scramble appeared underway to work out the details of a new bailout package to bring the country back from the brink of falling out of the euro.

As details of the new offer emerged, it appeared that Prime Minister Alexis Tsipras was capitulating to demands on harsh austerity terms that he urged his countrymen to reject in the referendum last Sunday, like tax increases and various measures to cut the costs of pensions.

He will seek the approval of Parliament on Friday. Much may hinge on his ability to persuade the more radical elements of his Syriza party to support a package that in essence was anathema to many of them last week.

What was breathtaking, however, was how in a matter of hours the entire dynamic in the Greek crisis seemed to shift, from apocalyptic warnings of a Zimbabwe in the Balkans, to a fresh optimism that the basics of a deal could be worked out.

Prospects for a deal improved through the day as a procession of European leaders came around to Mr. Tsipras’s conviction that pure austerity measures were insufficient in their own right and had to be accompanied by a commitment to reduce the burden of Greece’s stupendous debt.

Greece received vital political support and technical assistance from France, help that highlighted the contrasting approaches being taken by the two leading powers in the European Union. Germany has played the bad cop, standing firm against concessions to Greece and, in Mr. Schäuble’s case, openly doubting that the country really belonged in the eurozone. France has thrown itself into the task of finding a deal.

The French assistance appeared to be an effort to make sure the Greek proposal, submitted just before a midnight deadline, would be as thorough and salable as possible to Greece’s creditors and would smooth the way for a compromise on a new bailout package to keep Greece afloat financially and inside the euro.

France has been the most steadfast major nation in Europe supporting Greece ever since Mr. Tsipras was ushered in to power in January on a mandate to repudiate austerity. Paris has been particularly outspoken in recent days about the need for a compromise that would help Greece and hold the eurozone together.

Neither French nor German officials would discuss France’s involvement in the Greek proposal in any depth. But the development raised questions about whether France and Germany have split heading into the final negotiations or whether there is a back-room understanding between Paris and Berlin.

Ms. Merkel, speaking later in Sarajevo, reiterated her opposition to actually writing off some of Greece’s debt, though she was less definitive about steps like reducing interest rates or extending the payment period as ways of helping Greece manage its indebtedness.

Germany has taken an increasingly hard line toward Greece since the nation voted no on Sunday to an earlier bailout program in a referendum that sent political shivers across Europe. In the wake of the chaos sparked by the vote, Ms. Merkel flew Monday to Paris to join President François Hollande of France to discuss what to do next with Greece.

The situation has put Mrs. Merkel into the toughest position of her career. She has been forced to balance an angry German public, which sees no reason to give Greece billions of additional bailout money or to write down its debt, against the danger of a Greek exit from the eurozone.

Greece is a tiny country with limited economic impact on Europe, but considerable strategic value. European political experts had wondered throughout the week whether Ms. Merkel, as the leader of the most powerful country in Europe, would stand for becoming the first postwar European leader to countenance the first step back in Europe’s march toward greater integration.

They also wondered if she was willing to risk the prospect of a failed, embittered state within the European Union and NATO, an open wound in Europe’s southern and eastern flank that would be an open invitation to Moscow to exploit already inflamed division within the European Union.

 Prime Minister Manuel Valls of France on Wednesday  told lawmakers in the National Assembly on Wednesday in a speech that was broadcast live on Greek television, “France refuses that Greece leaves the eurozone in the name of our position and our commitments.” To secure a deal, though, he said Greece needed to pledge to modernize its economy and overhaul pensions.

He also suggested that Mr. Tsipras’s most pivotal request — a program to make Greece’s mountainous debt more sustainable — be taken seriously by other European countries. Until recently, that has been nearly a taboo idea in Europe’s halls of power, since European taxpayers are currently on the hook if Greece defaults on its debts.




NPR


The new proposals include sweeping reforms to VAT to raise 1% of GDP and moving more items to the 23% top rate of tax, including restaurants – a key battleground before.

Greece has also dropped its opposition to abolishing the lower VAT rate on its islands, starting with the most popular tourist attractions. Athens also appears to have made significant concessions on pensions, agreeing to phase out solidarity payments for the poorest pensioners by December 2019, a year earlier than planned. It would also raise the retirement age to 67 by 2022.

And it has agreed to raise corporation tax to 28%, as the IMF wanted, not 29%, as previously targeted.

Greece is also proposing to cut military spending by €100m in 2015 and by €200m in 2016, and implement changes to reform and improve tax collection and fight tax evasion. It will also press on with privatisation of state assets including regional airports and ports. Some government MPs had vowed to reverse this.

In return, Greece appears to be seeking a three-year loan deal worth €53.5bn.

The Greek government said parliament would vote on the proposals later today, before an emergency summit on Sunday of all 28 European Union leaders.

Many experts believe [the] debt, which is 177 percent of the country's gross domestic product, is unsustainable for a country that has not recovered from the 2008 financial crisis. Indeed, U.S. Treasury Secretary Jack Lew added his voice to calls for "Europe [to] ... restructure the debt in a way that is more sustainable." Christine Lagarde, the managing director of the IMF, one of Greece's toughest critics, echoed those calls.

But some European countries, especially Germany, have been reluctant. Chancellor Angela Merkel, on a visit to Bosnia on Thursday, appeared to rule out a "classic haircut" on Europe's loans to Greece.

Paths to War, Then and Now, Haunt Obama

PETER BAKER, N.Y. TIMES

Just hours before announcing an escalated campaign against Islamic extremists last week, President Obama privately reflected on another time when a president weighed military action in the Middle East — the frenzied weeks leading up to the American invasion of Iraq a decade ago.

“I was not here in the run-up to Iraq in 2003,” he told a group of visitors who met with him in the White House before his televised speech to the nation, according to several people who were in the meeting. “It would have been fascinating to see the momentum and how it builds.”

In his own way, Mr. Obama said, he had seen something similar, a virtual fever rising in Washington, pressuring him to send the armed forces after the Sunni radicals who had swept through Iraq and beheaded American journalists. He had told his staff, he said, not to evaluate their own policy based on external momentum. He would not rush to war. He would be deliberate.

 

“But I’m aware I pay a political price for that,” he said.

 

In forming a plan to destroy the Islamic State in Iraq and Syria using airpower and local forces, but not regular American ground troops, he searched for ways to avoid the mistakes of the past. He felt “haunted,” he told his visitors, by the failure of a Special Forces raid to rescue the American hostages James Foley and Steven J. Sotloff — “we just missed them,” he said — but their subsequent murders were not the real reason he opted for war, although he noted that gruesome videos released by ISIS had helped galvanize public support for action.

 

Mr. Obama dwelled on the killings of the two American journalists, Mr. Foley and Mr. Sotloff, telling guests that he had authorized the Pentagon to develop a rescue attempt this summer on the same day the matter was brought to him. It was conducted within days and executed flawlessly, he said. He noted that the United States does not pay ransom to terrorists, but remarked with irritation that President François Hollande of France says his country does not, when in fact it does.

 

Mr. Obama was  aware of the critics who have charged him with demonstrating a lack of leadership. He brought up the criticism more than once with an edge of resentment in his voice.

“Oh, it’s a shame when you have a wan, diffident, professorial president with no foreign policy other than ‘don’t do stupid things,’ ” guests recalled him saying, sarcastically imitating his adversaries. “I do not make apologies for being careful in these areas, even if it doesn’t make for good theater.”

 

Mr. Obama went on to reveal his thoughts on challenges he faces in combating the threat from ISIS. He expressed his frustration with the French for paying ransoms to terrorists, asserted that Americans are kidnapped at lower rates because the United States does not, resisted the idea of Kurdistan’s breaking away from Iraq and even speculated on what he would have advised ISIS to do to keep America out of the war in the region.

 

The president said he had already been headed toward a military response before the men’s deaths. He added that ISIS had made a major strategic error by killing them because the anger it generated resulted in the American public’s quickly backing military action.

If he had been “an adviser to ISIS,” Mr. Obama added, he would not have killed the hostages but released them and pinned notes on their chests saying, “Stay out of here; this is none of your business.” Such a move, he speculated, might have undercut support for military intervention.

 

While Mr. Obama sees bolstering the new Iraqi government as his path to ultimate success on that side of the border, he [is] less certain about the endgame on the Syrian side, where he has called for Mr. Assad to step down and must now rely on the same moderate Syrian rebels he refused to arm in the past.

Mr. Obama acknowledged it would be a long campaign, one complicated by a dearth of intelligence about possible targets on the Syrian side of the border and one that may not be immediately satisfying. “This isn’t going to be fireworks over Baghdad,” he said.

 

He made clear the intricacy of the situation, though, as he contemplated the possibility that Mr. Assad might order his forces to fire at American planes entering Syrian airspace. If he dared to do that, Mr. Obama said he would order American forces to wipe out Syria’s air defense system, which he noted would be easier than striking ISIS because its locations are better known. He went on to say that such an action by Mr. Assad would lead to his overthrow.

 

 “He’s definitely feeling it,” said one guest. At one point, Mr. Obama noted acidly that President Ronald Reagan sent Marines to Lebanon only to have hundreds of them killed in a terrorist attack because of terrible planning, and then withdrew the remaining ones, leaving behind a civil war that lasted years. But Reagan, he noted, is hailed as a titan striding the earth.

 

“He’s not a softy,” Zbigniew Brzezinski, who was national security adviser to President Jimmy Carter, said of Mr. Obama. “I think part of the problem with some of his critics is they think he’s a softy. He’s not a softy. But he’s a person who tries to think through these events so you can draw some long-term conclusions.”

 

Richard Haass, president of the Council on Foreign Relations and a former Bush administration official who was among the guests, said attention to nuance was a double-edged attribute. “This is someone who, more than most in the political world, is comfortable in the gray rather than the black and white,” he said. “So many other people in the political world do operate in the black and white and are more quote-unquote decisive, and that’s a mixed blessing. He clearly falls on the side of those who are slow or reluctant to decide because deciding often forces you into a more one-sided position than you’re comfortable with.”