Jan 11, 2021
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Pension reform: Why Macron slowed down, but Putin did not

Pension reform: Why Macron slowed down, but Putin did not

Photo: Evgeny Sofiychuk / TASS

The first obvious result of our recently initiated gradual increase in the retirement age: between July 1, 2020 and June 30, 2021, no one in Russia will retire on old age. Of course – with the exception of rare beneficiaries.

How many people have already suffered from senseless savings on the elderly, even the Russian Ministry of Finance cannot say. There are only rough estimates. Today we are talking about up to about 2.5 million elderly people, who, unlike their slightly older peers, were denied or will be denied the minimum benefit in the second half of last year and in the first half of this year.

Nobody is interested in what the victims of Law No. 350-FZ (on raising the retirement age) will live on, women 55+ and men 60+. Thus, the pension reform is entering the most aggressive phase without any social depreciation. What is the worst thing: there is not a single hint that the authorities in this matter will back down, at least for a while, given the catastrophic “covid” realities in the economy.

Meanwhile, for example, in France there are signals that the pension reform announced there too may not start at all. In any case, until the next electoral cycle. Moreover, the signals are sent by those officials who previously claimed that, they say, all decisions were made by Paris, and there is no going back.

If a year ago, in his New Year’s address, the President Emmanuel Macron spoke a lot about the need for pension reform in France, then on December 31, 2020, addressing the nation, he did not say a word about it. The reason for such a striking change, according to Heinrich Sterdynyak, one of the most respected economists of the Fifth Republic, that now there is an emergency situation in the economy.

Indeed, the previous decisions have lost their former relevance. The authorities face new challenges. This means that you need to react in a new way. It is as if the driver continued on a pre-selected route in order to be in time at the appointed time, although pedestrians suddenly appeared on the road in front of him. If it slows down, important plans will collapse. However, continued movement will lead to casualties.

So it is before many presidents, including before Vladimir Putin, there were similar problems. What to do: finish what you started? Or stop reform in order to save their stranded elderly citizens?

However, the point is not even that Macron is “kinder” than Putin. It’s just that the French government, alas, is more professional than the Cabinet of Ministers of Russia. Presidents everywhere make decisions based on what their “inner circle” advises them. To understand why the Fifth Republic decided to slow down, one should recall the interview with the head of the Ministry of Labor there. Elizabeth Bourne… Answering questions from reporters from Europe 1, Cnews and Echos on December 20, she said that pension reform is no longer a “priority.” Although, according to her, she had no doubt quite recently that there is no more important task than stabilizing the budget by raising the retirement age.

It would be naive to think that Paris simply succumbed to the strike movement. Macron held “sectoral negotiations” with the trade unions and actually got his way through unprincipled concessions. But, according to the French official Born, today it is much more important for the government of the Fifth Republic to overcome the crisis caused by the pandemic. “The executive branch should be 100% mobilized to respond in accordance with the development of the epidemic,” while any reforms lead to even greater uncertainty, said the head of the Ministry of Labor.

These are not just meaningless words of an official unknown in our country. The UK Economics Observatory explicitly states the impact of the Covid-19 pandemic and government response: “There is a wealth of scientific evidence that growing uncertainty is having a negative impact on the economy. This suggests that the economic impact of Covid-19 could be greater and more sustainable than the current crisis. ” In short, today blindly adhere to previous decisions on this score – a terry managerial lack of professionalism. Consequently, the continuation of the pension reform in Russia is not only inhumane, but also stupid from the point of view of economic science. Yes, “there is always uncertainty about the future, but a significant increase in uncertainty, like the one we are experiencing now, undermines the ability to form a confident view of the future,” notes the Economics Observatory.

In other words: why should the driver push people (whom the capitalists do not feel sorry for) if upon arrival at the destination he still learns that plans have changed? Individuals make a decision to buy a home with a mortgage, assuming that earnings will not fall to the level of default. Students study in anticipation of higher wages. The government is carrying out reforms to improve the economy (at least in a normal, civilized country). And based on all this, businessmen are investing in new projects based on expected demand.

If uncertainty increases, all plans go to hell everywhere. And then the Kremlin wonders why Russia’s GDP is not growing?

For example, by lowering the mortgage rate to 6.5% amid increased uncertainty, the Russian government, even acting with the best of intentions, provoked a rise in property prices. Whereas in any economic crisis, housing is usually cheaper. Everything is very simple: the “square” that has fallen in price compensates for the loss of income in the near and middle future due to a drop in investment. Thus, it does not worsen the deferred demand that the business is oriented towards. And here the clever people from the government did everything exactly the opposite. As the deceased said Chernomyrdin: “We wanted the best, but it turned out as always.”

This fully applies to the pension reform in Russia. In the face of growing unemployment and galloping mortality, as well as with the widespread curtailment of small businesses, the main task of any government is to maintain the former level of demand. At least – for food and apartments. It would seem that this is where older people with a guaranteed income should play their role, which will reduce the economic uncertainty in the country. On the contrary, the loss of several million stable consumers during the pension reform will ultimately negatively affect the food and construction industries. And behind them – the domino effect throughout the country. Then the Cabinet of Ministers will turn into a “fire brigade” instead of a development institution.

But for the government to be professional instead of the harmful slogans “If not him, then who?” we need a real turnover of power. Yes, something is being done in our country. But the fact remains: Russia has not developed for at least 10 years. Whereas other states (excluding Ukraine) are moving forward. This is clearly shown by the rate of GDP growth, which clearly indicates a low level of decision-making in the Russian Federation.

Of course, it is much easier to fool the people through the controlled media than to properly manage the economy. But sooner or later this policy will end badly for the country.

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