France's Money Problem: Why Pensions Are Squeezing Schools

Students across France have been marching in the streets, angry about crumbling classrooms, missing teachers, and schools that need serious repairs. Their protests shine a light on a much bigger problem: France has been spending more money than it takes in for over 50 years. A huge chunk of that spending goes to paying retirees, leaving little money for things like education. Now, with a major presidential election coming up, France faces some tough choices about its future.

France's budget deficit — the gap between what the government earns and what it spends — is about five percent. That is the kind of number you usually see during a war or a deep economic crisis, not during normal times. Because of this, investors around the world are worried about lending money to France. When investors feel nervous, they charge higher interest rates, which makes it even harder for France to pay its bills.

One of the biggest reasons for France's money troubles is its pension system. A pension is money the government pays to people after they retire. France has one of the lowest retirement ages among wealthy countries — around 63 years old. At the same time, French people live very long lives, often longer than people in most other countries. That means the government pays out pensions for many, many years per person.

France's pension system works differently from countries like the United States. In France, the pensions of retired people are paid for by taxes on workers who have jobs right now. In the 1990s, about four workers paid in for every one retiree. Today, that number has dropped to about two and a half workers for every retiree. That puts a huge strain on the system and leaves less money for everything else — including schools.

Reuters economics correspondent Leigh Thomas, who is based in Paris, explained it simply. 'If there isn't money for schools, it's partly because a big chunk of the public pot of money is going to pay for pensions,' he said. Students protesting in the streets may not realize this connection, but the math is clear. The money that could fix a leaky school roof is often going to fund someone's retirement check instead.

Other countries have dealt with this problem by raising their retirement age. Denmark and Greece both have a retirement age of 67. Greece was actually forced to raise its retirement age during its own debt crisis years ago. France tried to do something similar — President Emmanuel Macron pushed to raise the retirement age from 62 to 64. The plan caused weeks of angry protests, but it eventually passed — only to be paused later to win support for passing the national budget.

Now France is heading into a presidential election, and the retirement age is once again a hot topic. Marine Le Pen, the far-right candidate leading in some polls, wants to let people who started working young retire at age 60. Jean-Luc Mélenchon, a hard-left candidate, wants everyone to be able to retire at 60. A center-right candidate named Édouard Philippe is the only major candidate calling for raising the retirement age to 65 — but he is trailing far behind in the polls.

Most economists agree that France needs people to work longer and pay into the pension system for more years. But raising the retirement age is incredibly unpopular. Older voters tend to show up at the polls in large numbers, so politicians are afraid to make them angry. 'Something's got to give at some point,' said Thomas.

There is also worry about what France's problems could mean for other countries in Europe. France uses the euro, the shared currency of many European nations called the Eurozone. If France's debt problems get bad enough, fear could spread to other countries, just like it did during the Eurozone debt crisis of the early 2010s. The European Central Bank has tools to help, but using them comes with strict conditions that some candidates might refuse.

For now, France can still borrow money from investors — it has not reached a crisis point yet. But its borrowing costs keep rising, and there is no clear plan to fix the pension problem. The students in the streets want better schools, economists want a higher retirement age, and politicians want to win the next election. Until those goals line up, France's financial future remains very uncertain.