Emmanuel Macron, in a press conference following the dissolution of the National Assembly in Paris on June 12, 2024, addressed the ongoing battle for the valuable retiree vote between the National Rally and the government majority. Facing accusations from the far-right that he was quietly planning to reduce retiree pensions to save money, Macron denied having a hidden agenda. He stated that retiree pensions would indeed be indexed to inflation and that retiree purchasing power would not be used as a bargaining chip. Macron blamed the extreme left and extreme right for jeopardizing the pension system by proposing to undo the 2023 reform.
The issue of indexing pensions to inflation has been a topic of discussion within the government and at Bercy to address public finance concerns as prices have been rising due to the energy crisis for nearly three years. The mechanism is costly, with over 14 billion euros in 2024, as inflation reached close to 5% in 2023, while the wages used to fund pensions are not indexed to prices. Despite this, the government has avoided questioning this mechanism due to concerns about the impact on purchasing power, particularly since retirees have a higher average standard of living compared to workers, often owning their homes. Macron also pointed out the anxiety caused by discussing potential changes to pensions close to the European elections, as retirees make up a significant portion of the electorate and have higher voter turnout.
In recent weeks, Bercy has been campaigning to convince Macron to at least “under-index” pensions in the 2025 budget, meaning they would increase slower than inflation, to save billions of euros and have retirees contribute to the collective effort to stabilize public finances. The next government will need to find savings elsewhere in a challenging budgetary environment. Prior to the elections, the government pledged to achieve 20 billion euros in savings in 2024 and another 20 billion euros in 2025 to reduce the public deficit, which surpassed 5% of the GDP in 2023 and needs to be below 3% by 2027. However, aside from the unemployment insurance reform, other potential savings have not materialized.
Macron’s statements on retiree pensions and the economic challenges facing the government come at a critical moment as France prepares for elections and grapples with rising inflation and public debt. The government’s commitment to stabilizing public finances while maintaining social welfare programs will be a key issue for voters. As Macron navigates political pressures, including accusations from the far-right, he will need to find a balance between addressing economic concerns and ensuring the well-being of retirees. The decisions made in the coming months will not only impact the financial stability of the country but also the social fabric and trust in the government.
