France Faces Urgent Demographic Decline with Major Pension System Challenges

France is confronting a significant demographic turning point as a new report highlights that for the first time since World War II, the country is projected to experience a negative natural population balance by 2025, with deaths surpassing births. The fertility rate has fallen well below the replacement level, exacerbating concerns over an aging population that is expected to represent nearly one-third of the total population by 2070. This demographic shift presents profound challenges to public finances, the social welfare model, and particularly the pension system, which relies heavily on demographic stability.

According to the Cour des comptes' December 2 report, France's demographic slowdown threatens the sustainability of its healthcare sector and social services. Despite President Emmanuel Macron advocating for a "demographic rearmament," experts remain cautious about the effectiveness of natalist policies, noting limited success seen elsewhere, even under authoritarian regimes. Immigration alone is unlikely to offset the population decline, although foreign labor may be essential to prevent more severe demographic repercussions.

France's pension system is notably extensive, accounting for 19% of European retirement expenses and 6% of global retirement expenses, amounting to approximately 400 billion euros or 14% of GDP. While France hosts 15% of the EU population, it supports 17.5% of European retirees, a slight decrease from a decade ago amid shifting retirement rights and demographics across the continent. The system's density and coverage offer pensions to nearly all retirees, but the growing aging population in France parallels challenges faced across Europe, necessitating ongoing reforms to maintain sustainability and generational equity.

A parliamentary mission scheduled for early December aims to thoroughly examine the causes and consequences of declining birth rates, signaling a delayed yet critical focus on demographic issues. Pierre Moscovici, president of the Cour des comptes, warns against repeating past fiscal missteps related to public debt, emphasizing the urgent need to prioritize demographic challenges in political discussions.

In light of these trends, France must prepare by enhancing employment rates among younger and older workers and adapting its pay-as-you-go pension system to demographic realities. This demographic and fiscal evolution underscores the importance of multifaceted policy responses to secure France’s social and economic future.