France: Pension reform to lift potential output

We estimate that reforms to France’s pension system proposed by the government would increase the labour force by 1.4%, lifting potential output by 1.1% by 2035 relative to a no-reform baseline.

What you will learn:

• The proposals have sparked widespread opposition. Massive strikes that could disrupt economic activity in the short-term are a major risk to the outlook.
• Still, we expect the reforms will be passed, even if the final text is watered down. The centre-right opposition group Les Republicans will likely support the legislation, ensuring enough votes in Parliament.
• Even after the reforms, a lot remains to be done to balance France’s pension system. A minimum retirement age of 64 and senior participation rates are among the lowest in OECD countries.