More like the French
You can ‘live to work’, or ‘work to live’. The latter is definitely the case in France, where there’s now “a twelfth nationwide day of protests against a bill that will make the French work longer”:
“Some trains will be cancelled, and strike actions can also be expected among refinery workers, garbage collectors and teachers, at a time when opinion polls show a wide majority of voters still oppose pushing retirement age by two years to 64.
But industrial action has lost steam, and the latest rallies have gathered fewer people than the record crowds seen earlier this year that brought millions of protesters out on the streets.”
France has a generous state-backed pension system that pays people half of whatever their income was during their 25 highest earning years, up to an indexed limit that is currently €41,136 ($A67,430). The result is that the French government spends 14.5% of GDP on its pensions, the third most in the world. The only countries that spend more relative to the size of their economies are the other well-known bastions of fiscal responsibility, Italy and Greece. Australia spends just 4.3% of GDP:
If you’re the French President, you have a few options to stave off a fiscal crisis. One, cut spending elsewhere. Two, raise taxes on an ever-shrinking tax base (the boomers are retiring). Or three, reform/tweak the pension system. President Macron’s attempt at option three is what’s causing the protests, and it’s not like he’s even doing any reforming: he’s simply raising the eligibility age from 62 to 64 – kicking the can down the road a bit, if you will. Australia is doing exactly the same in July this year by raising the state pension eligibility age from 65 to 67 for those born after 1956, to zero protests.
Raising the eligibility age is understandable in a western world with declining fertility rates and much greater life expectancy than when these schemes were concocted. For example, Australian life expectancy was 70.9 years when the aged pension was created; it’s now 83.8. These schemes are becoming less affordable because people are having fewer kids and they’re living longer.
As to why the French retirement age is still well below Australia’s? The French really don’t like working, and they’re quite a bit more productive than Australian workers, so can afford to take extra leisure:
If we want to work less, retire earlier and maintain our living standards, all without fleshing out the base of the demographic pyramid with fertility improvements or opening the immigration floodgates (which only delays the problem for another generation), then we need to be a bit more like the French – we need to be more productive.