How French bosses want sacrifices from pensioners, but more for themselves


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10:16 am - January 19th 2013

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by Tom Gill

French employers have called for rigueur for millions of pensioners. A five year plan of misère that will see pensions in the private sector cut in real terms.

Under the bosses’ austerity plan, from 1 April this year, pensions will rise by 1.5% less than inflation, and in the following years to 2017 they will rise by 1% below the rise in the cost of living. That is expected to save 4 billion euros a year for the two pension funds Agirc and Arrco which are facing a 10 billion euro projected deficit in five years time. Unions have declared the proposals unacceptable, although (bar the CGT) they have been willing to accept year one of the plan if bosses share the burden by increasing company contributions to the schemes.

But employers’ association Medef rejects this. Indeed they want more sacrifices – a progressive increase in the retirement age, to the tune of a quarter a year, from 2017, a move that will save a further one billion euros.

Picking on ordinary pensioners like this isn’t necessary – French firms may claim poverty now but the top 40 listed companies (CAC 40) in recent years had more than enough cash to ensure the pension schemes’ solvency. They chose instead to use their profits to pay out more than 100 billion Euros in dividends, in the three years to 2011 , however.

The plan is also very unfair. Around 13 million pensioners are on around 1,000 euros a month on average. And more than a million people over the age of 64 live in poverty. Contrast that with the bosses’ own retirement nest eggs. No sign of rigueur for them.

In addition to bonuses, stock options and free shares, half of the patrons of the France’s top 40 listed companies (CAC 40) will receive supplementary pensions, or retraites-chapeaux, netting them 545,000 euros annually each on average when they retire.

Franck Riboud of Danone, Jean-Paul Agon of L’Oréal and Henri de Castries of Axa are to pocket more than a million euros each. And that’s in addition to the statutory pension…

French fat cats’ ‘supplementary’ pensions – top 15
1. Franck Riboud (Danone): 1.76 million euros
2. Jean-Paul Agon (L’Oréal): 1.48 million euros
3. Henri de Castries (Axa): 1.03 million euros
4. Bernard Arnault (LVMH): 643,812 euros
5. Gérard Mestrallet (GDF-Suez): 640,141 euros
6. Christophe de Margerie (Total): 564,493 euros
7. Pierre Pringuet (Pernod Ricard): 516,938 euros
8. Hubert Sagnières (Essilor): 496,139 euros
9. Lars Olofsson (ex- Carrefour): 491,022 euros
10. Thierry Pilenko (Technip): 476,078 euros
11. Benoît Potier (Air Liquide): 473,887 euros
12. Gilles Schnepp (Legrand): 456,745 euros
13. Jean-Paul Chifflet (Crédit Agricole): 421,200 euros
14. Denis Hennequin (Accor): 392,818 euros
15. Jean-Bernard Levy (ex- Vivendi): 327,348 euros
From L’Expansion.Com


Tom Gill blogs at www.revolting-europe.com

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Reader comments


1. So Much for Subtlety

Wow this is an astonishingly bad article. Even for LC.

French employers have called for rigueur for millions of pensioners. A five year plan of misère that will see pensions in the private sector cut in real terms.

Th Blue State Model, as the Americans call it, has come to an end. We promised too much to the Baby Boomers when there were a lot of workers and few old people. We can’t pay for it now there are fewer workers, no young people (except low skilled immigrants) and too many old people. The system will have to change. Given France takes over 505 of the country’s GDP already, it can hardly increase taxes.

That is expected to save 4 billion euros a year for the two pension funds Agirc and Arrco which are facing a 10 billion euro projected deficit in five years time.

As you see, the problem is simple – too many old people who have been promised too much. Something needs to be done to solve this problem and actually this looks quite moderate and sensible.

Unions have declared the proposals unacceptable, although (bar the CGT) they have been willing to accept year one of the plan if bosses share the burden by increasing company contributions to the schemes.

So they want a permanent increase in taxes in exchange for a temporary agreement to moderation? Interesting. Company tax is actually a tax on employees. So it makes little sense to tax existing (ie young) workers to pay for the pensions of retired (ie Baby Boomer) workers.

Picking on ordinary pensioners like this isn’t necessary – French firms may claim poverty now but the top 40 listed companies (CAC 40) in recent years had more than enough cash to ensure the pension schemes’ solvency. They chose instead to use their profits to pay out more than 100 billion Euros in dividends, in the three years to 2011 , however.

Oh. My. God. They paid a dividend? The bastards! You know how this capitalism thing works don’t you? If they do not pay dividends, no one will invest and even in France that means these companies will collapse? What is more, who owns companies these days? Anywhere from a third to a half of all shares are owned by pension funds. It is likely to be more in France because it is not such an attractive place for foreign investment. Which means if they do not pay dividends, the pension funds have no money to pay retirees. How is that any sort of solution?

The plan is also very unfair. Around 13 million pensioners are on around 1,000 euros a month on average. And more than a million people over the age of 64 live in poverty. Contrast that with the bosses’ own retirement nest eggs. No sign of rigueur for them.

My God, it is like Trot Week at a Third Tier Polytechnic. It is not unfair that people who contribute the most to a company’s success should be paid accordingly. Companies do not need to search rigorously for someone to work in the mail room. They do for a chief executive. Because the chief counts. Those people need to be paid accordingly.

But even if we gave a second’s credence to this Trot nonsense, cutting their salaries and pensions would do absolutely nothing to solving the problem. The Top 15 you mention have pensions worth about 10 million euros put together. To quote the scale of the problem once more:

That is expected to save 4 billion euros a year for the two pension funds Agirc and Arrco which are facing a 10 billion euro projected deficit in five years time.

Great. If you confiscate them all, you will have gone 0.25% of the way to meeting your target.

The plan is also very unfair. Around 13 million pensioners are on around 1,000 euros a month on average.

And you will have added all of one euro a year to each of those pensioners’ pensions.

2. Derek Hattons Tailor

It’s rigour.

3. Derek Hattons Tailor

@1 “It is not unfair that people who contribute the most to a company’s success should be paid accordingly. Companies do not need to search rigorously for someone to work in the mail room. They do for a chief executive. Because the chief counts. Those people need to be paid accordingly.”

There is no shortage of people wanting to be CEOs. The idea that they contribute most to the companies success (but never its failure which is always due to the economy, the unions or some other scapegoat) is risible. The same boards that preside over record profits, receive knighthoods and are masturbated over by city types are the same ones that run it into the ground – therefore the board makes almost no difference to company performance. They are figureheads only, to give a public face to the anonymous tax dodging tossers that own it. In most companies no one would even notice if the CEO dropped dead for a month, but (to use your anachronistic example) if the mail room is unmanned the organisation grinds to a halt in days.

4. So Much for Subtlety

3. Derek Hattons Tailor

There is no shortage of people wanting to be CEOs.

There is no shortage of people wanting to be a striker for Manchester United either. That is irrelevant too. Manchester United should not be paying people according to how many other people would be willing to do the job.

The idea that they contribute most to the companies success (but never its failure which is always due to the economy, the unions or some other scapegoat) is risible.

Says some anonymous guy on the internet. Their selection process is not perfect, but it is as perfect as they can make it. The result is that they get the best people for the job they can. A CEO can preside over a disaster or a triumph. Some times both. Ms Jung has been a disaster at Avon for instance. The CEO of Rio Tinto has just taken the blame for the 14 billion pound write down they have had to do and resigned in disgrace. CEOs actually do matter. A lot.

The same boards that preside over record profits, receive knighthoods and are masturbated over by city types are the same ones that run it into the ground – therefore the board makes almost no difference to company performance.

Says some guy on the internet. This is nonsense. Look at Hewlett Packard which is still trying to recover from the disaster that was Carly Fiorina. The Board was not a figurehead there.

You simply do not even know as much as you would learn from reading the finance pages. You are wasting our time.

5. Derek Hattons Tailor

You are just an anonymous guy on the internet too, unless you imagine that I know/care who you are, which I don’t.
You have deliberately missed the point. If companies can succeed or fail with the same board, it indicates that factors other than the composition of the board are more influential than they are.
I have shares in a company whose board structure and composition has changed many times in the few years I’ve owned them, share price movement does not correlate to any of those changes. Whereas, using the football analogy, a change of manager/players demonstrably correlates with success and failure. Man U were also rans to Liverpool until Alex F arrived.
And the Wayne Rooney comparison is misleading. Many want to be strikers, but few have the ability, hence high demand relative to supply, and high pay. By contrast, many want to be on boards and many are able – eating a complimentary buffet whilst making statements of the blindingly obvious all the time with an air of high seriousness are not difficult attributes to acquire. Although going to the right school/Uni/Golf club obviously helps.
Numbers who “qualify” (although it requires none) for boards are kept low artificially to maintain the illusion of skill and the high remuneration (e.g to be a NED you have to have served on a board).
Explain how RBS under Fred Edwards made record breaking profits and went bust in the space of a year – assuming the board wished to avoid it going bust. Anyone can make some good and some bad decisions, so why are they allegedly worth so much if they are basically just chancers ?

Ouch Derek, don’t prick SMFS’s bubble. The fact that your average director keeps on proving they’re a glorified gimp is irrelevant… As us my opinion that a corpie is a mindlessly authoritarian, semi competent box ticker!!

What matters is the fact that the only way said corpies can award themselves a self declared, inflation busting, multi mega bucks pay check, bonus, share options etc is by imposing a pay cut in one way or another on everyone who actually generates – or has generated in the past – the wealth of that company!

Like you I don’t consider what I call ‘I don’t care, get the goddam job done’ to be worth megabucks…

Explain how RBS under Fred Edwards made record breaking profits and went bust in the space of a year

Yeah, go on SMFS. Explain that. That Fred Edwards, what a bastard.


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