Retirement demographics and immigration demographics are France’s two intractable challenges in this crisis.
There are many types of participants in the current French protests and riots: students, teachers, recent migrants, children of long-ago immigrants, members of the left and ultra-left, thugs and looters, populists and anti-elites etc. Telling the story through the motives of these protagonists is perfectly legitimate, even if they are not all working from the same playbook.
But there is another narrative overlaying all of these sub-plots, a backdrop that touches all of them and that brought the protests to a head. And that is the evolution of French demographics over the last half century. As these things go, the crisis blew up slowly, then suddenly.
Mass protests are frequent in France for cultural and historical reasons. That is, after all, the country that beheaded its king, and whose national motto includes the word Egalité. In the past ten years, there have been at least ten sizable waves of protests. To name only a few: in 2017, there was protest against labor rule changes; in 2018, protest by rail workers; in 2018-19, the Gilets Jaunes (yellow vests) against a new fuel tax; in 2019, climate-related protests; in 2019-20 and again in 2023, massive protests against pension reform; in 2025, protest against budget austerity; and now, protests for better education, alongside riots by troublemakers and “casseurs.”
The interesting thing, and topic of this post, is that the current student protests and the protests against pension reform of a few years ago run counter each other. In other words, the demands from today’s protesters are incompatible with the demands from protesters of years past.
Let me explain.
One of the key demands from today’s student protesters is an increase in funding for public education. But France is already spending on education at a rate that exceeds the OECD average, as shown in this chart. Only the Nordic countries, Belgium, Israel and the U.K. spend more, as a percent of GDP.
So, the real problem may not be the level of expenditures, but where the money is spent. The breakdown is shown in the next chart below. For every 100 euros spent by the French state on a teacher, that teacher’s take-home pay is only 38.6 euros, or about the same as the 38.4 euros pension contribution generated by that teacher.
To clarify, since the pension system is pay-as-you-go, this pension contribution is not set aside for the teacher in question; it is instead a contribution to the pension pool that is paid in the same year to already-retired teachers. One could say that this is an accounting feature and that pensions to retired teachers would be paid at the same level irrespective of the existence of this one current teacher. Nonetheless, the chart highlights the fact that the State is spending as much on retired teachers, or indeed more when you add all the components, as it is on current ones.
I am not trying to argue that the annual pension received by a retired teacher is too generous or not generous enough. That debate is beyond the scope of this post. My point instead is that a very large share of the education budget is allocated to pensions. There is, as a result, a crowding-out of the wages that are available to pay current teachers.
RETIREMENT DEMOGRAPHICS
The stress imposed by pension obligations comes from the usual two sources of demographic stress on any state’s finances nowadays, namely a lower supply of euros on one side and a higher demand for euros on the other side:
- Supply of euros: There are in France (and in all Western economies) fewer workers per retiree because birth rates have collapsed since the end of the baby boom in the mid 1960s, as shown below with France’s total fertility rate (TFR). In 1960, the TFR was an average of 2.8 children per woman. Subsequently, the introduction of the contraceptive pill in 1967, the two oil crises of 1973 and 1979 and the legalization of abortion in 1975 all contributed to bring down the fertility rate to 1.8. Since then, it has been as high as 2.0 and as low as 1.6 where it stands today. Fewer children in the past fifty years means fewer workers today who are paying in the pay-as-you-go pension system, and therefore fewer euros.
- Demand for euros: The retirement of baby boomers has created more demand for pensions. There are two factors in this equation: 1) the increased life expectancy of retirees, shown in the next chart, and 2) the sheer increase in the number of retirees, shown in the second chart below.
A retiree aged 65 in 1960 had about 14 more years of life ahead of him. In 1990, he had 18 more years. And today, he has 21 more years. Compared to 1960, today’s French retiree will cost the State 50% more euros (in real terms), because he will live 50% longer, all other things being equal.
This increase represents only the cost per retiree, but because there are far more retirees now than in 1960 (next chart), the pension burden on the State has exploded much higher. In 1960, there were 5 million French citizens aged 65 or older. In 2026, there are 15 million, going on 18 million by 2050.
So, the actual forward burden on the State is a lot more than a 50% increase since 1960. In terms of man-years of future obligations, annual pensions will have to support a doubling or tripling of annual payments in the next twenty-five years.
Another way to look at the supply-demand situation is the old-age dependency ratio, which is the ratio of people aged more than 64 to people aged 20 to 64 (x100 on the y-axis). It is the ratio of retirees to working people. In 1960, there were 2 retirees for every ten workers. Today, there are over 4 retirees for every 10 workers. The old-age dependency ratio has more than doubled since 1960 and will have nearly tripled by 2050.
IMMIGRATION DEMOGRAPHICS
There is another demographic component to this story. During the Trente Glorieuses, the ‘glorious thirty’ years of 1945-1975, France imported a large number of low-skilled workers because it needed to staff its factories while the economy was booming and French production was thriving. In recent years, France has again imported a large number of low-skilled workers, mostly for humanitarian reasons.
But the French economy is no longer growing at a fast rate and cannot as easily absorb and integrate the newcomers. It is beset by many problems including 1) a euro currency that is arguably too high for its industry, 2) Chinese imports that are hollowing out local manufacturing, 3) automation that requires fewer workers, and last but not least 4) a budgetary crisis that has driven up sovereign yields to their highest levels since 2002.
The protests come at a juncture when France has little maneuvering room. The fiscally conservative say that the country cannot make offers to the protesters without further damaging its finances and driving up government yields even higher, and that it cannot tax the wealthy without seeing more of them leave for friendlier jurisdictions. But the left says that both of these things should be done in order to redress rampant inequality, and that the sovereign debt can even be cancelled, or defaulted on.
This is a high stakes situation, brought about slowly at first, and then suddenly, by France’s demographic evolution in the past fifty years. For a long time, the State has lived beyond its means, as have many other rich countries (the U.S. included), and has borrowed from the future to meet the shortfall. But this configuration no longer works. At one end, there is a surplus of unneeded low-skilled workers, at the other, a rising numbers of pensioners. In the middle, the working-age population is declining in numbers (chart) and is employed in declining industries. To top it all, the government’s debt is growing to dangerous proportions.
SOLUTIONS
There are therefore three difficult challenges: 1) addressing the retirement equation and the balance between expenditures on the young vs old, 2) adopting a selective smart immigration approach to ensure integration and assimilation, and 3) re-energizing economic prospects for the working-age middle.
There are no easy fixes. France and most developed economies will likely have to raise their retirement age toward 70, except for those who are in manual labor jobs or who have physical impairments. The State will have to come up with new solutions to address the immigration issue. And France will need to adopt policies that are friendlier to wealth creators, entrepreneurs and investors.
P.S. The INSEE (Institut national de la statistique et des études économiques), France’s official statistics agency, expects the size of the working-age population to remain flat rather than decline because of small increases in the retirement age.