Macron, Unions and the French Pension Battle

(Bloomberg) --

French unions are saying “non.”

President Emmanuel Macron's plan to overhaul the country's bloated pension system — created after World War II — has gotten a thumbs down from unions. They've called an indefinite strike starting today that could bring the country to a standstill at a time Macron needs the economy to hold up.

The last serious attempt to touch the pension system was in 1995, when then-Prime Minister Alain Juppe's proposal brought thousands of people into the streets and paralyzed France for about a month. The plan was dropped.

As William Horobin reports, this time might be different. Polls show a majority of the French consider the current system financially unsustainable and are in favor of Macron's plan to simplify the complex web of benefit regimes.

The government, which has already pushed through changes to tax and labor laws, has said it's open to tweaking its pension reform but won't abandon it.

Still, when violent demonstrations against a gasoline tax increase broke out last year, Macron did back down. He forked out $19 billion in tax breaks to appease the so-called “Yellow Vest” protesters.

Will he retreat this time? Much depends on the staying power of the unions.

Global Headlines

The “I” word | U.S. House Democrats are inching toward bringing articles of impeachment against Donald Trump — charging abuse of power, bribery and obstruction — as they dismiss Republican assertions their inquiry into the president is flawed. Judiciary Chairman Jerrold Nadler closed yesterday's hearing by declaring Trump committed “impeachable offenses,” saying his actions were “a direct threat” to the nation.

• House Speaker Nancy Pelosi plans to make a statement on the status of the inquiry at 9 a.m. eastern time.

Johnson's promise | U.K. Prime Minister Boris Johnson unveiled his election pledges, vowing to deliver Brexit and a tax-cutting budget within 100 days of winning the Dec. 12 vote. The Tories sought to contrast their agenda with the “gridlock and uncertainty” they say would result from a hung Parliament — an outcome they're calling “a very real possibility.”

• Read this deep dive from Tim Ross on a key task for Johnson's party: reining in his temper.

Realpolitik | After months of turmoil in Germany's ruling coalition, the Social Democrats appear to be backtracking from an immediate break with Chancellor Angela Merkel's party, and will instead seek more concessions. That probably reflects political pragmatism — if the coalition were to collapse, triggering an election, opinion polls show both parties would suffer.

Divided city | At financial firms across Hong Kong, personal political views that used to have little bearing on work are taking on new significance as months of pro-democracy protests harden opinions on both sides of the debate. It's making an already difficult business environment even tougher to navigate and fueling concerns about the city's future as one of the world's premier financial hubs.

Contagion question | Brazil, Mexico and Argentina have been relatively immune to the unrest sweeping Latin America. As Daniel Cancel and Simone Iglesias explain, grievances over stagnant growth and insufficient pensions — plus tensions over subsidies — also exist in the “big three,” it's just that voters in these places already expressed their views at the ballot box and are waiting for results.

What to Watch

• The U.S. Senate is rushing to approve a bill to punish Beijing for its actions against the Uighurs, a minority ethnic group, with China already threatening retaliation for two new U.S. laws supporting Hong Kong.
• The presidents of the Mercosur trade bloc — Argentina, Brazil, Paraguay and Uruguay — meet in Brazil today after Trump threatened to impose steel and aluminum tariffs on two of them.
• OPEC ministers are haggling in Vienna today over a deal to defend oil prices, with key player South Arabia using both carrot and stick to convince other members to honor output targets.

Tell us how we're doing or what we're missing at balancepower@bloomberg.net.

And finally … Sydney is famous for its shimmering harbor and clear blue skies. Not this summer. Pockets of the city ranked worse this week than Shanghai on air quality. As bushfires ravage the country's east coast, pollution has become a regular occurrence in Australia's biggest city, triggering health warnings and intensifying the debate about climate change Down Under.

--With assistance from Raymond Colitt.

To contact the editor responsible for this story: Michael Winfrey at mwinfrey@bloomberg.net, Rosalind MathiesonKathleen Hunter

©2019 Bloomberg L.P.