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French parliament debates pension reform as new strike looms

A stormy debate kicked off in France's parliament on Monday over a highly contested pension reform championed by President Emmanuel Macron, a day ahead of new strikes and mass demonstrations against the plan.

French parliament debates pension reform as new strike looms
French Labour Minister Olivier Dussopt speaks during the debate regarding the draft law on pension system reform at the National Assembly in Paris, on February 6, 2023. (Photo by Ludovic MARIN / AFP)

The reform is the flagship domestic policy of Macron’s second and final term in office, with the president determined to implement it despite fierce opposition from the political left and unions, but also the wider public.

At the start of the parliamentary debate, Labour Minister Olivier Dussopt struggled to make himself heard above loud booing and shouting.

READ MORE: LATEST: How Paris transport will be hit by Tuesday’s pension strikes

“Here we are, even if you don’t want us to be, here we are,” he said.

“Our (pensions) system is structurally in deficit… Doing nothing is not an option.”

Speaker Yael Braun-Pivet urged lawmakers to keep quiet, telling them: “We’re not at a protest, we’re in the assembly”.

Macron’s ruling party lost its overall majority in elections last year, even though it remains the largest faction.

His government under Prime Minister Elisabeth Borne wants to pass the legislation with the help of allies on the political right.

The government is also trying to avoid using clause 49.3 of the constitution — an article which allows the automatic adoption of a law without a vote.

Such a move would risk stoking further protests.

Left-wing opponents of the administration filed thousands of amendments ahead of the parliamentary debate beginning.

‘Huge mobilisation’

Walkouts and marches are planned for both Tuesday and Saturday, although unions for rail operator SNCF said they would not call for a strike at the weekend, a holiday getaway date in some regions.

Trains and the Paris metro are again expected to see “severe disruptions” Tuesday according to operators, with around one in five flights at Orly airport south of the capital expected to be cancelled.

“We’re counting on there being rallies so that the country’s elected representatives take into account the opinion of citizens,” Philippe Martinez, leader of the hard-left CGT union, told the France 2 broadcaster on Monday.

Last week’s demonstrations brought out 1.3 million people nationwide, according to a police count, while unions claimed more than 2.5 million attendees.

Either way, it marked the largest protest in France since 2010.

With pressure growing, Borne on Sunday offered a key concession to win support from the conservative Republicans party in parliament.

While the reform will set a new retirement age of 64 for most workers — up from 62 — Borne said people who started work aged 20 or 21 will be allowed to leave work a year earlier.

Calling the offer a “band aid”, the head of the CFDT union Laurent Berger said that the move was not “the response to the huge, geographically and professionally diverse mobilisation” that has swept France.

But Republicans chief Eric Ciotti told newspaper Le Parisien that he would back the reform, potentially securing a majority for the government.

Keep seniors working

After an attempted 2019 pensions reform that was stymied by the coronavirus crisis, the changes mark another step by reformist Macron in aligning France with its EU neighbours — most of which already have higher retirement ages than the proposed 64 years.

He aims to lift the pensions system out of deficit by 2030 by finding around €18 billion of annual savings — mostly from pushing people to work for longer and abolishing some special retirement schemes.

But while Borne and others have insisted theirs is a fair reform, critics say that women will on average have to wait still longer for retirement than men, as many have interruptions in their careers from childbearing and care responsibilities.

Opponents also say the reform fails to adequately account for people in physically strenuous jobs like builders and doesn’t deal with companies’ reluctance to hire and retain older workers.

Borne said the government would pile pressure on companies to end the practice of letting go of older employees, which leaves many struggling to find work in their final years before pension age.

“Too often, companies stop training and recruiting older people,” Borne told the JDD weekly on Sunday.

“It’s shocking for the employees and it’s a loss to deprive ourselves of their skills.”

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WORKING IN FRANCE

URSSAF: What is it, how it works, and how it affects you

if you are working as a freelancer, contractor or have set up a business in France you will need to become familiar with the social security collections agency Urssaf. Here's what it is and how it works.

URSSAF: What is it, how it works, and how it affects you

Unions de Recouvrement des Cotisations de Sécurité Sociale et d’Allocations Familiales – more usually known, because that’s a mouthful, by the acronym Urssaf – are the administrators who collect social security contributions that fund a large part of France’s labyrinthine social security system, including, notably, health insurance.

It is responsible for collecting some €534.4 billion from 9.8 million users every year to help fund social security in France.

If you’re an employee in France, you will probably have nothing directly to do with Urssaf, because – for the most part – dealing with it will fall into the realms of Somebody Else’s Problem (ie your employer). 

But if you are freelance, a contractor or set up your own business you will almost definitely have to deal with Urssaf. 

Type of regime

Many people working for themselves in France use the simplified Micro Entrepreneur regime – often still referred to as auto entrepreneur – which sets up a basic sole trader-style business. 

Its advantage is (relative) simplicity but it has limits on earnings as well as other limitations like being able to write off business expenses.

Micro-entrepreneur: How to set up as a small business in France

Other options for freelancers or sole traders include the Entrepreneur individuel à responsabilité limitée (EIRL – basically a limited liability sole trader); Entreprise unipersonnelle à responsabilité limitée (EURL – another sole trader option), Société par Actions Simplifiée Unipersonnelle (SASU); or Société à Responsibilité Limitée (SARL).

These allow for higher earnings but are more complicated and may require an accountant to set up.

If you start off as a micro-entrepreneur but then your earnings go over the threshold you can switch to another regime without attracting a penalty.

How to register 

These days the whole registering a business thing can be done online. For a simple micro enterprise, you can create an account on autoentrepreneur.urssaf.fr, then give details of the business you intend to run, and your social security numbers. 

If you’re looking to set-up a more complex business structure such as a EURL, SARL, SASU, or SAS, you should start with the portail e-procédures at procedures.inpi.fr.

You must then send off the declaration, which is registered with the relevant Centre de formalités des entreprises;

  • For commercial businesses eg shops or bars, this is the Chambre de commerce et d’industrie;
  • For artisans, craftspeople, tradespeople and some other commercial businesses, it is with the chambre de métiers et de l’artisanat;
  • For professions libérales – including, for example, freelance journalists – it is with Urssaf.

Within 15 days of registration, you should receive your business registration number, known as the SIRET number.

Notice that you have been signed up to the relevant social security regime should follow in a few weeks. 

Since 2020, all independent workers belong to the Assurance Maladie health regime, and a few professionnels libéraux are signed up to the standard Assurance retraite for their pensions. 

How much does it cost to set up a business?

That depends on your business. Setting up as a micro entrepreneur (auto entrepreneur) costs nothing administratively and is the simplest way for freelancers to set up for themselves. 

Technically speaking it is a tax status rather than a business structure. 

Then what?

Once you’re up and running, the most regular contact with Urssaf should be when you file your earnings online, which – for micro entrepreneurs – can be done monthly or quarterly using the auto entrepreneur website.

You will then be informed how much you owe in cotisations, (social security contributions) which will be taken out of your bank account around a month later.

 If you have a French-incorporated business, such as EURL, SARL, SAS or SASU, you will use URSSAF’s main website www.urssaf.fr, or get your accountant to do so. Some business set-ups in France require you to use an accountant.

READ ALSO Ten tips for working as a freelancer in France

Banks

Note that you will need to set up a dedicated bank account for your business. As a micro entrepreneur, despite claims from banks, it does not have to be a business account (which attract larger fees). But it should be separate from your personal bank account, and just used to pay your charges, for any business expenses (which you cannot claim for, if you’re a micro entrepreneur). 

Other business regimes, such as the Entrepreneur individuel à responsabilité limitée (EIRL – basically a limited liability sole trader); Entreprise unipersonnelle à responsabilité limitée (EURL – another sole trader option), Société par Actions Simplifiée Unipersonnelle (SASU); or Société à Responsibilité Limitée (SARL), have certain advantages on allowable earnings, compared to the very basic micro-entrepreneur regime – but will incur a sliding scale of charges on set-up, and require different book-keeping and accounting systems. Some will also require you to be registered for VAT.

Do I need an accountant?

This is really a personal choice – the micro-entrepreneur regime is designed to be simple and to be used by individuals, but some people still prefer to use an accountant.

The business structures for higher earners are a little more complicated and may require an accountant to set up. Most people use accountants if they are within these structures, unless they are confident in both their French and their book-keeping abailities.

If you have an accountant you can nominate them to be your representative in any dealings with Urssaf, although note that you are still responsible for any fees and charges, even if they are incurred by your accountant making a mistake.

Okay — how much do you pay in charges?

For micro-entrepreneurs, social charges can be paid monthly or quarterly. They are calculated as a fixed percentage of your earnings, depending on the type of work.

Rates are 12.8 percent for the sale of goods, 22 percent for artisanal and commercial services, 22 percent for professions libérales attached to the standard Assurance Retraite for retirement, and 22.2 percent for a small number of professions libérales attached to Cipav. 

A levy of 0.1 percent to 0.3 percent is also charged. It goes to the CPF fund giving all workers the right to a financial contribution for training.

Note, micro-entrepreneurs are limited in the amount they can earn: for business activities and the supply of accommodation (hotels, bed and breakfasts, rural cottages classified as furnished apartments, furnished apartments), the threshold is €188,700.

For service and professional activities, the threshold is €77,700.

Micro entrepreneurs will be obliged to step up to another business regime if they break these earnings thresholds.

For other business types, these maximum earnings thresholds do not exist, but bosses will have other requirements, for example, they may need to use the services of an accountant, and will have to be audited once they cross a certain earnings threshold.

Taxes

It’s important to note that Urssaf deductions are only part of the story – there are also other taxes to consider.

Personal income tax is covered in the annual income tax declaration, while businesses taxes fall under a range of tax regimes, depending on your type of business.

Commercial, industrial, or manual/trades/crafts businesses fall under the Bénéfices Industriels et Commerciaux (BIC) system. Professional businesses fall under the Bénéfices non Commerciaux (BNC) system. Agricultural businesses use the Bénéfices Agricole (BA) system.

Don’t forget, either, the Contribution Fonciere des Entreprises (CFE) property levy, a local tax payable by any company or self-employed person earning more than €5,000 per year, even if they conduct their business at home, at the kitchen table. This one is due every December.

What if I have a problem?

You can contact Urssaf staff online via the website, or arrange an appointment for a face to face meeting at their offices, if you prefer. Contrary to popular opinion, they’re there to help you.

Urssaf, in the past, had a poor reputation. But, as with all French bureaucracy, it’s better to work with it rather than try to fight or resent it.

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