‘Generation war’ dogs pension debates in France and Germany

PARIS — A generational reckoning is brewing in Paris and Berlin, where a new wave of younger politicians is putting pensioners on notice: The system is buckling and can’t hold unless retirees do more to help fix it.

Culture, language and local politics may add a distinct flavor to each debate, but the European Union’s two biggest economies are dealing with the same issue — how to pay for the soaring costs associated with the retirement of baby boomers.  

The problem is both demographic and financial. Declining birthrates mean there aren’t enough young people to offset the boom in retirees at a time when economic growth is sluggish, salaries have stagnated and purchasing power isn’t evolving at the same rate as it did for previous generations.

And with the cost of real estate skyrocketing, young people feel that buying a home and other opportunities afforded to their parents’ generation are increasingly out of reach. 

With budgets already strapped thanks to priorities such as rearmament in the face of Russian aggression, reindustrialization and the green transition, a growing number of young politicians from the center to the right of the political spectrum are calling out retirees for not contributing to the solution. 

Some lawmakers in Germany, like 34-year-old Johannes Winkel, are calling for greater “intergenerational justice.” The 38-year-old French MP Guillaume Kasbarian is going a step further, arguing France should rethink its pay-as-you-go system — similar to Germany’s — in which current workers fund retirees’ pensions through taxes.

Targeting pensioners is a politically dangerous proposition. They are a reliable voting constituency, heading to the ballot box in greater numbers than younger generations — and they lean centrist. German Chancellor Friedrich Merz’s conservative bloc got an estimated 43 percent of the vote among people aged 70 and above in February’s general election, and older voters helped Macron secure reelection in 2022. 

French Budget Minister Amélie de Montchalin told lawmakers last month that she didn’t “want to trigger a generation war” over the government’s fiscal plans for next year. 

But she — and her counterparts across the Rhine — may not have a choice.

‘Fair to all generations’

Lawmakers in France are sparring this week over a highly contentious plan to freeze inflation adjustments on pension payments next year, part of a wide-ranging effort to trim billions of euros from the budget and get the deficit below 5 percent of gross domestic product.

The debate in France echoes similar conversations in Germany, where Winkel is among a group of young conservatives who rebelled against a pension reform package put forth by Merz’s government, saying current benefits for older people are too generous and asking for a plan that is “fair to all generations.”  

A group of leading economists argued in an op-ed in German newspaper Handelsblatt that Merz’s proposed pension package would be “to the detriment of the younger generation, who are already under increasing financial pressure.”  

The leaders of Germany’s coalition set out to resolve the dispute last week, with Merz vowing to take on a second, more far-reaching set of pension reforms as early as next year.  

But it’s unclear whether that proposal has appeased all young conservatives. In a letter this week, the group said its 18 lawmakers would decide individually how they will vote on the immediate pension package, which is set to go for a vote on Friday. Every vote will matter, as Merz’s fragile coalition has a majority of only 12 parliamentarians.

On Tuesday, Merz’s center-right bloc held a test vote to see if there was enough conservative support to pass the pension reform package. The results of the internal vote were unclear.

Opinion surveys in Germany and France show that much of the public favors protecting existing pension systems and benefits. Leftist parties in both countries have also strongly pushed back against measures that would freeze or lower pension benefits, arguing that the public pension system is a core element of social cohesion.

But intergenerational cracks are emerging.

 “Measures on pensions show a generational cleavage: They are massively rejected by pensioners but supported by nearly one out of two in the younger generation (18-24),” according to an analysis from French pollster Elabe published in October. 

In another poll from Odoxa, a small majority of working-age people in France agreed that current pensioners are “better off because they were able to leave earlier than those still working.”

Key differences

There are key differences between France and Germany, however.

Pension benefits in France are far more generous than in Germany, and help keep the poverty rate among people aged 65 and above lower than that of the general population. 

The opposite is true in Germany, where the over-65 population is worse off than those younger than 65, in part because public pensions became comparatively lower after pension reforms passed in the 2000s. 

Ultimately, however, demographics and economics vary so much from one generation to another that it’s almost impossible to make a pension system “fair,” according to Arnaud Lechevalier, an economist at the Paris 1 Panthéon-Sorbonne University.

The idea that each generation can have the same return on investment on their working-aged contributions is, in Lechevalier’s words, “a deeply stupid idea.”