News

Bruno Cavalier
Chief Economist at ODDO BHF

The public transport strike in protest at the proposed pension reform has ended after seven weeks of disruption. The government did not withdraw but amended its reform plan. No progress has been made regarding the pension-funding issue. It is scheduled for debate at a social conference in the near future. It would be reasonable to assume that the French have understood, if not accepted, that more stringent conditions for retirement were inevitable. Apart from a negative (and temporary) impact on retail trade, this period of social turbulence has not worsened economic conditions, which remain positive. 

The fortnight’s focus

From 5 December until the end of last week, the public transport sector (SNCF, RATP) was severely disrupted by strike action initiated by unions opposing the proposed pension reform. The situation has almost returned to normal (chart lhs). In what shape is the French economy following this event, what might the possible implications be in the political sphere? 

The strike lasted longer than expected. There are certainly no winners in this labour dispute. The unions used their disruptive power to defend corporatist interests without garnering widespread popular support. The government maintains its draft reform plan, amended from the original, but it showed its lack of preparation (absence of precise figures) on a subject that it was supposed to have explored in detail over the past two years. It is hard to say what is the most pitiful aspect of this, alas, predictable story¹ . 

Business and households surveys provide the most immediate measure of the effects of this disruption on the economy. The impact on the business climate is almost indiscernible. In January, INSEE's synthetic index stood at 104.5 vs 105 on average over 2019. Industry confirms its stabilisation, with construction and services stable at high levels. Only retail trade reflected, unsurprisingly, a deterioration, albeit much less than in the "Yellow Vests" episode (chart rhs).

¹See our Focus-France: "The pension reform will not take place".

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