Europe News

Macron under pressure as France suffers the longest strike in more than 30 years

Key Points
  • During his new years' address, President Macron asked for a "rapid compromise" between his government and workers.
  • The open-ended strike is an attempt by public sector workers to show their dissatisfaction with the government's plan to update the pension system.
  • Prime Minister Edouard Philippe said last month that the changes would be "very gradual."
French President Emmanuel Macron speaks at the Elysee Palace on May 06, 2019 in Paris, France.
Aurelien Meunier | Getty Images

French President Emmanuel Macron is under growing pressure from trade unions as he seeks to reform the country's pension system.

Public sector workers entered their 30th day of industrial action on Friday – the longest protest in France since 1986, when transport workers demonstrated for 28 days. The latest dispute doesn't seem to have an end in sight, with trade unions criticizing Macron for "living in his own bubble."

"The process will be protracted, strikes could last for another month," Tomasz Michalski, professor of economics at HEC Paris business school, told CNBC Thursday.

There will be a new round of talks between government officials and trade unionists Tuesday. Workers are set to take to the streets again later next week.

During his new years' address, President Macron asked for a "rapid compromise" between his government and workers.

"What has he said that was new about this famous social … reform? Nothing. I have heard this speech 1000 times before. We have the impression that the President of the Republic has closed himself within his own bubble," Philippe Martinez, secretary general of the General Confederation of Labour, a trade union, told BFM TV Wednesday.

The Federation Syndicale Unitaire, another French trade union, also said in a statement Wednesday that the President is in "denial of the social reality."

"It is therefore more than ever necessary to continue the mobilizations," they argued.

The open-ended strike is an attempt by public sector workers to show their dissatisfaction with the government's plan to update the pension system. France has one of the most expensive pension systems in the world, according to data from the OECD (Organisation for Economic Co-operation and Development). President Emmanuel Macron vowed ahead of his election in 2017 to make the current setup simpler.

Macron is pushing for a single, points-based system. This would replace the current 42 different pension plans that vary according to profession and region, which means some workers are currently entitled to a full pension before the minimum retirement age of 62. The proposed regime aims to make pensioners contribute the same amount and give them equal rights.

Room for negotiation

"Macron will probably eventually be able to claim at least a victory: his record so far is of refusing to cave in to union pressure, and he seems to be winning the war of attrition with the strikers, whose numbers are slowly diminishing," Constantine Fraser, analyst at the research-firm TS Lombard told CNBC Thursday.

"The real question is whether he will be forced into compromises that significantly undermine the point of the reform package," Fraser added.

Prime Minister Edouard Philippe said last month that the changes would be "very gradual."

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France sees biggest strike in decades as workers protest pension reforms

The new system is only set to be applied to those entering the workforce in 2022. Workers born before 1975 will not be impacted, and those born after that date will only subject to the new regime from 2025 onwards.

Macron could ultimately decide to keep a portion of the existing web of professional exemptions or abandon any attempt to increase the effective retirement age, Fraser from TS Lombard told CNBC.

One of the most contentious issues in the reform plan is Macron's attempt to encourage French workers to keep working until 64, past the retirement age of 62. Michalski said the President could maybe back down on this one.

"Macron did not mention, however, the age pivot, initially set at 64, which was supposed to be the age at which all workers could retire with a pension based on points," Michalski said about Macron's New Year's address.

"This omission opens the door for negotiation," he said.

The pension reform proposal will be discussed within the government in January and be put to the French parliament in February.