Like most Western countries, and despite having one of the highest fertility rates in Europe, France is not immune to the aging of its population. In his essay, Maxime Sbaihi analyses the consequences of this ageing on the economy and on our social model.
Since the end of World War II, our social model has been based on intergenerational solidarity, which is sensitive to demography, the engine of its financing.
The conclusion is clear today: the working population must finance, through pay-as-you-go, a record number of retirees who are spending an incresaing time in retirement. The beneficiaries of the pension system are now on average richer than its contributors.
Our pension system is theoretically based on 3 levers: working longer, lowering the level of pensions and increasing contributions. It is understandable that politicians have often struggled to find the best combination without altering the social model. Social needs are increasing, but it is difficult to raise the contributions when the workforce represents 50% of the total population. (The number of active persons in relation to the number of inactive ones aged 60 or over was 1.9 in 2020 but is projected to be 1.6 in 2040 and 1.4 in 2070, source INSEE)
The author then focuses on the impoverishment of young people, an increasingly worrying situtation: “the poor of yesterday were retirees at the end of their lives, the poor of today are young people facing the future”. He believes that intergenerational equity is no longer guaranteed. Income gaps are widening in the face of a “patrimonialization” of society. He specifies that the real estate and financial assets of the sexagenarians (and older) are the highest of all the other age groups. He points out the fact that this overabundant savings has little impact on the financing of the economy since it is mainly oriented towards low-risk and liquid investments. Thanks to a longer life expectancy, today’s retirees postpone the transmission of their wealth.
On the political side, the author paints a picture that may once again prove to be divisive:
– Young people abstain the most at each election, are often poorly registered on electoral lists, tend to become radicalized and rather prefer a citizenship of commitment, especially on ecology
– Those over 50 are the most mobilized, compose the absolute majority of the electoral college, are often seduced by centrism and prefer a citizenship of duty
Democracy tends to slide towards gerontocracy since politicians tend to give priority to older voters in the face of a youth who shun the polls.
The author proposes rather liberal solutions to limit this intergenerational injustice: the establishment of an universal income, modification of inheritance and estate taxation, a new status mixing permanent and fixed-term contracts, and intragenerational solidarity.
The essay is well documented, with numerous bibliographical references, and is written in a very accessible style. The subject is topical and is at the heart of political debates in the context of public debt management.
Maxime SBAIHI is an economist and essayist. After starting his career in the banking sector in Paris, then at Bloomberg in London, he was a Director of Studies at the Institut Montaigne and is now the Strategy Director of Club Landoy.
Note by Sophie Friot
