Devastated Welfare State Force French Retirees to Seek Work

Tuesday, 30 Oct 2012 09:26 AM

 

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When angry workers took to the streets of France two years ago to protest moves to increase the retirement age from 60 to 62, one pensioner had trouble sympathising with their cause.

Having fallen from nightclub manager at the peak of her career to eating at a soup kitchen, Francoise Peter wanted more than anything else to find another job.

"I sat there in front of my television thinking: are we living in the same world?" said Peter, who says her 1,000-euro monthly state pension is not enough to make ends meet. "People in this country want to take it easy, to retire early and lead a quiet life. But there are no guarantees in life."

A surge in the number of pensioners heading back to work has come about despite a reluctance by President Francois Hollande's Socialist government to pursue new reforms after the fierce 2010 protests that greeted those by his predecessor Nicolas Sarkozy.

It also suggests that a system which has produced one of the lowest average retirement ages in the Western world -- 59.1 years compared to more than 64 in EU partner Sweden and 71.5 in Mexico -- is failing to provide many ageing French with the economic security they seek.

The phenomenon has wider consequences for the labour market, where 25 percent of youth are unemployed, and underlines the strains on a pension system whose deficit is seen nearly quadrupling to 114 billion euros by 2050.

Currently 500,000 pensioners are back in work -- three times the number in 2005 and a figure that is likely to expand as life expectancy stretches beyond 80 and a population of 16 million pensioners expands.

"This is new for France," said Anne Sonnet, author of a report by the Paris-based Organisation for Economic Cooperation and Development (OECD) on pensions.

"We are slowly catching up to other European countries (in terms of working longer), which is good overall, but in cultural terms it's a deep transition," she said of European peers such as Germany where the legal retirement age has been raised to 67.

 

 

NOT SO GOLDEN YEARS

The reasons driving pensioners back to the workplace are mixed.

For some, it is a matter of choice: a 2009 change to the law under Sarkozy lets people work while claiming a pension, encouraging them to top up their incomes by returning to their old jobs on a part-time basis.

In highly-skilled jobs and drawing a sizeable pension, these baby boomers are taking advantage of their good health to stay active and supplement their income.

But others are victim of an economic slowdown which has brought France to the brink of recession.

As lay-offs mount, older workers are often first in line for the chop because of their higher salaries. Yet Sarkozy's 2010 reform means workers born after 1955 only get a full pension at 62 if they have made pension contributions for 41.5 years.

Former secretary Mireille Giroux, 60, said she can live on her pension of 22,000 euros ($28,400) per year but took a weekend job handing out promotional samples at a shopping mall to help an unemployed daughter who is struggling to find work.

"I don't want to stop being an active person just because someone else decided I should retire," Giroux, who was laid off at 58.

An average public pension for someone over 65 in France amounts to 1,583 euros ($2,100) per month, third highest among rich nations behind Luxembourg and Austria.

But many pensioners in other countries get more income from private pensions and investments, putting retirees in France in 10th position in terms of total income, according to the OECD.

 

SENIORS-FOR-HIRE.COM

Entrepreneurs are taking advantage. Two recruitment web sites catering for older workers have cropped up in the past five years.

"I realised in 2008 that there was a lot of talk about unemployed older workers but nothing suitable for them on the Web," said Valerie Gruau, who founded seniorsavotreservice.fr in 2008.

The bet is paying off: since last year, membership has doubled to 93,000. And others have followed suit.

Bertrand Favre, 30, founder of rival website Bitwiin.fr, got his idea after seeing many older workers in the United States.

"The baby boom generation seemed forgotten in France," he said. "But these people are in great shape intellectually, they still want to do things and the only thing stopping them is usually prejudice."

With its ageing population, France's pension system is increasingly under strain as the ratio of active workers to pensioners expected to slide to 1.2 in 2050 from 1.8 today.

Retirees returning to work on full or part-time contracts continue to pay into the pension system, easing the strain. But many are unable to get hired on regular contracts and take informal jobs that make no contributions.

Analysts say the return of pensioners to the labour market is not necessarily depriving young job-seekers of opportunities as they often accept posts that are of no interest to someone seeking to get on the first rung of the jobs ladder.

It is a social trend on which President Francois Hollande's five-month-old government is seeking to capitalise.

The government is promoting a new "generational contract" under which pensioners will stay at their workplace long enough to give young apprentices on-the-job training, a scheme aimed at easing 25 percent youth unemployment.

While hiring the young remains a priority, bosses say they like incentives to retain older workers after retirement because they help train new hires, offsetting their lack of experience.

"In the French job market, you are cursed if you are over 45, but even here mentalities are starting to change," said Thierry Ehrmann, CEO of art auction web site Artprice.com.

"CEOs are starting to realise that older workers bring a lot of wisdom and added value to the table, that they can help channel the energies of more impulsive youths." ($1 = 0.7749 euros)

© 2014 Thomson/Reuters. All rights reserved.

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