France's President Emmanuel Macron shakes hands with Britain's Prime Minister Rishi Sunak as he arrives at the Elysee Palace
France's plan to push the retirement age by two years from 62 to 64 is not welcomed by a large number of voters AFP News

As French opinion polls show a wide majority of voters still oppose pushing the retirement age by two years from 62 to 64, thousands of citizens poured into the streets to demonstrate their fury and opposition to French President Emmanuel Macron's move.

Work stoppages and disruptions to the nation's ports and oil refineries are being felt as far away as New York and Nigeria, according to at least one report by Bloomberg. As noted by France24, this newest wave of protests takes place a day before Friday's much-awaited verdict by France's Constitutional Council on the legality of the bill. All sides are awaiting the April 14 verdict on the validity of the reform by the Council, which has the power to strike down part or even all of the legislation.

While Macron and his government argue the law is essential to ensure that France's generous pension system does not go bust, the unions say this can be done by other means, including taxing the rich more or making deeper changes to the pension system. This potential political and institutional crisis has far-reaching implications as it affects both the country's finances as well as the livelihood and well-being of the country's workers.

Raising the pension age in France could have various economic effects, both in the short term and the long term.

In the short term, raising the pension age could lead to increased labour force participation and reduced government spending on pensions, which could have positive effects on the economy. Workers who delay their retirement and continue working can contribute to economic growth by increasing productivity, generating tax revenue, and reducing government spending on pensions. This could also help mitigate the effects of an ageing population on the economy.

On the other hand, raising the pension age could also have negative effects in the short term. It could increase unemployment, particularly among younger workers who may struggle to find work as older workers remain in the workforce longer. Additionally, older workers may face age discrimination in the labour market, which could make it difficult for them to find work even if they are willing and able to continue working.

In the long term, raising the pension age could have more significant positive effects on the economy. It could help ensure the long-term sustainability of pension systems, which is particularly important in light of an ageing population and increasing life expectancy. It could also encourage workers to save more for retirement and reduce their reliance on government pension programs.

However, raising the pension age could also have negative long-term effects on the economy if it results in a smaller labour force and reduced economic growth. If older workers stay in their jobs longer, there may be fewer opportunities for younger workers to enter the workforce and advance their careers, which could lead to a decline in productivity and innovation. Additionally, if older workers are unable to find work or are forced to retire earlier than planned, they may become more dependent on social welfare programs, which could increase government spending.

The economic effects of such a move by Macron would depend on a variety of factors, including the specific policy measures implemented and how they are implemented. Policymakers would need to carefully weigh the potential short-term and long-term effects of such a policy before making any decisions.

French workers can retire earlier at a reduced pension amount, as early as 55 years old for those who started working early and have accumulated sufficient contributions. In addition, some categories of workers, such as those in physically demanding jobs, can retire earlier with full pensions.

In contrast, the standard retirement age in the United States is 66-67 years old, depending on the worker's birth year. Workers can begin to receive reduced Social Security benefits as early as age 62, but full benefits are not available until the full retirement age is reached. The full retirement age is gradually increasing to 67 years old for workers born in 1960 or later.

France's retirement age is generally lower than that of the United States, although it is important to note that the retirement ages and benefit structures can vary depending on the specific type of pension program. Additionally, many workers in both countries continue to work past their retirement age for various reasons, including financial necessity or personal preference.

France and the United Kingdom have some similarities and differences with regard to their pension programs. In France, the pension program is based on a pay-as-you-go system, where current workers pay into the pension system to support the pensions of current retirees. The retirement age is generally 62, although workers in certain categories, such as those in physically demanding jobs, can retire earlier with full pensions. The pension program also includes a defined benefit component, which guarantees a certain level of retirement income based on a worker's earnings and years of service.

In the UK, pensions are also based on a pay-as-you-go system, but it also includes a funded component through individual savings accounts. The retirement age is currently 66, but it is set to rise to 67 by 2028 and to 68 by 2046. The UK's program includes a state pension, which provides a basic level of retirement income, and private pension plans, which can be either defined benefit or defined contribution plans.

One key difference between the two systems is the level of pension benefits provided. France's pension program provides more generous benefits than the UK's pension program, particularly for lower-income workers. In addition, France includes a higher level of social insurance, which provides additional benefits such as disability and survivor benefits.

Another difference between the two systems is the level of public and private provision. In France, pensions are primarily a public program, while in the UK, the pension system includes both public and private components. The UK's pension program also encourages workers to save for retirement through individual savings accounts, which are not part of the French pension system.

With so much at stake for both France as a country and the citizens who live there, it is essential for both sides to arrive at a solution that safeguards the workers while allowing the state to ensure it can support such a program.

By Daniel Elliot

Daniel is a business consultant and analyst, with experience working for government organisations in the UK and US. On his free time, he regularly contributes to International Business Times UK.