11:00 am, September 25, 2022
When it comes to retirement, often, always, you need to design the calculator. This is the case when trying to quantify the net gain of a possible drop in the retirement age from 62 to 64. This step should lead to 10 billion euros per year, or about 0.6% of GDP (gross domestic product), according to the Pensions Orientation Council (COR). A sum that the government intends to use to secure the regime and prevent it from sinking further into the red. But also to finance other key measures, such as lowering production taxes or old age. Except that, from one end to the other, working another two years would not pay as much as expected. This difficulty, which is obviously a source of political controversy, in understanding the macroeconomic impact (unemployment, growth, public finance) of such a deplorable reform is also highlighted by the CoR in its latest report.
In the plus column: additional contributions and pensions to be paid for a shorter time. In that of minus: a surge in social spending and unemployment benefits. This is what economists call the “repercussion”. One in two French people who retire is unemployed: he is unemployed, in nursing home, disabled or on sick leave. The two-year career extension automatically increases the number of these distressed seniors. And, at the same time, the sums intended to help them.
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Those who had a job keep it for another two years. The others see the airlock of precariousness lengthening
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These hidden costs are detailed in two notes from the Directorate General of the Treasury (DG-Treasury) and the Directorate for Research, Studies, Evaluation and Statistics (DREES), dated January and prepared at the request of HORN. According to Drees, if we had gone from 62 to 64 years in 2019, spending on social benefits would have increased by 3.6 billion euros, or 0.14 points of GDP. Invalidity pensions would have exploded by 1.8 billion, with 160,000 additional beneficiaries, who, exhausted by strenuous work, cannot continue their business. The payment of the social minimums would have increased by 830 million. And that of daily sickness benefits, 970 million.
“For 1 euro of pension to be paid you have to count from 25 to 50 cents of additional social benefits to be paid”, explains Michael Zemmour, economist at the Sorbonne Center for Economics. Because active people who were on the side of the road before the age of 62 stay there even longer before they can stop. “Whoever had a job keeps it for another two years, observes Michael Zemmour. The others see the airlock of precariousness lengthening. “
Read also – Pensions: how the majority is divided on a passage of the reform by way of amendment
First victims: women and workers
This is precisely what a note from the Ministry of Labor reveals on the effects on unemployment benefits: individual situations, approaching the age of sixty, stop waiting for the new retirement age. A status quo observed during the 2010 reform, which ended the departure at 60. Going to 64 would thus contribute to an increase of 1.3 billion euros in the cost of the return to work allowance, and the number of beneficiaries by 84,000 people. First victims: women and workers. “For a significant part of the population, such a reform will not move them from retirement to work, but from retirement to lower incomes”, continues Michael Zemmour.
With the key, for the state, a saltier note. According to DG Treasury, all these transfers would cost almost 0.2% of GDP. To be subtracted, therefore, from the earnings expected from a future reform. And again: without counting the financing measures that will have to be taken to fill the gaps in the schemes concerned (Unedic, health insurance) and help the communities that pay RSAs. What to bring out his calculator again and again …
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