Economist Pierre Rousseaux: France's pension imbalance stems from educational inequality and low-wage trap
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In an op-ed published in Le Monde, economist Pierre Rousseaux argues that the French pension debate focuses too narrowly on retirement age, contributions, and pension levels. He contends that the pay-as-you-go system's balance depends on broader economic factors: the number of contributors, their wages, and levies. Rousseaux identifies two key weaknesses. First, France's declining PISA scores and high educational inequality lead to lower future wages and contributions. Second, decades of social security contribution reductions around the minimum wage (SMIC) have created a 'low-wage trap,' with high implicit marginal tax rates discouraging wage progression. He suggests shifting policy focus from creating minimum-wage jobs to enabling upward wage mobility through education, training, housing, and mobility investments. The article warns that these structural economic issues inevitably manifest in pension account imbalances.
Source report
The French debate on pensions often narrows to three questions: at what age should people retire, how much should they contribute, and what level of pension should be guaranteed? Yet these parameters represent only the visible part of the problem.
In a pay-as-you-go system, balance depends on:
- The number of contributors
- Their wages
- The levies based on those wages
- Relative to the number of retirees and the pensions paid to them
In other words, almost all the weaknesses of the French economy—employment, wages, productivity, and demographics—eventually end up reflected in pension accounts.
The First Issue: Education
The first problem plays out in schools. France's results in the OECD's PISA (Programme for International Student Assessment) rankings continue to decline, and educational inequalities remain high.
Later in life, lifelong learning does little to correct these gaps:
- Nearly 30% of adults have low skills in literacy, numeracy, or problem-solving
- Fewer than 20% of them access training
- By contrast, more than 60% of the most qualified adults access training
Skills determine access to employment, wages, and the adoption of new technologies. A less effective school system today therefore also means a lower wage bill and reduced contributions tomorrow.
The Second Problem: Low Wages
For thirty years, France has supported low-skilled employment through massive reductions in social security contributions around the minimum wage (SMIC). This policy has protected jobs.
However, the socio-fiscal system also creates a steep barrier to escaping low wages: as salaries rise, exemptions decrease, certain benefits disappear, and levies increase. The Council of Economic Analysis thus proposes reducing these implicit marginal rates and gradually shifting efforts toward education, training, housing, or mobility. The challenge is no longer creating jobs at the minimum wage, but enabling upward wage trajectories.
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Source
Politique : Toute l’actualité sur Le Monde.fr.Western