Three of this installment’s eight decisions do not, on close reading, say what their title suggests - this installment flags each case as it comes up. The shared terrain: work, taxation and the welfare state, over half a century. The Institut Thomas More report examines the creation of the wealth tax (1981), the lowering of the legal retirement age to 60 (1982), the Chirac privatizations (1986), the “RMI” minimum-income scheme (1988), payroll-tax exemptions on low wages (1993), the 35-hour work week (1998), the abandoned constitutional “golden rule” on public finances (2011), and the end of universal family allowances (2015).
Work under constraint: retirement, low wages, the 35-hour week
The ordinance of 26 March 1982, a central campaign promise of François Mitterrand, lowered the legal retirement age from 65 to 60, with 37.5 years of contributions required from 1 April 1983. The report calls it “one of the foundational errors of the last fifty years” (“une des erreurs matricielles des cinquante dernières années”) and documents, drawing on DREES’s (the health and social-affairs statistics directorate) long-run data series, the trajectory that followed: spending on the pension branch rose from 7% to nearly 15% of GDP between 1982 and 2025, and its share of total social benefits climbed from roughly 33% to more than 45%. The annual deficit of the pension system reaches, according to the report, around €65 billion in 2024 against €370 billion in spending - as much as a third of the public deficit, financed through debt. The report also notes that the employment rate among older workers remains one of the lowest in Europe: around 35% in France, against 60% in Germany and 70% in Sweden.
The next decision does not say what its title suggests. The report titles its chapter on payroll-tax exemptions “the preference for poverty” (“la préférence pour la pauvreté”) - a phrase that could be read as a grievance against the welfare state. That is not its argument. The report instead faults France for having, through the law of 27 January 1993 - the report’s own summary table lists the date incorrectly as “27 July” - carried by the Balladur government and then broadened under subsequent governments, chosen to subsidize low-skilled employment at the very moment the country was opening itself to competition from low-wage economies - even as it still held, in 1975, high-value-added industrial sectors. “On assigne des centaines de milliers de salariés à des revenus sans cesse plus bas, mais jamais assez bas” (“Hundreds of thousands of employees are consigned to ever-lower wages, yet never low enough”), the report writes, calling the policy a “trappe à pauvreté” (“poverty trap”). The Cour des comptes (national audit office), quoted by the report, puts a figure on the cost of these general exemptions from employer contributions: “passés de 20,9 milliards d’euros en 2014 à 77,3 milliards d’euros en 2024 […], soit un triplement de leur poids, qui atteint 10,6 % de la masse salariale privée en 2024” (“risen from €20.9 billion in 2014 to €77.3 billion in 2024 […], a tripling of their weight, which now reaches 10.6% of private-sector payroll in 2024”).
The 35-hour week closes this series. The “loi Aubry I” of 13 June 1998, followed by the “loi Aubry II” of 19 January 2000, generalized the statutory work week to 35 hours. The report places the reform “au plus mauvais moment” (“at the worst possible moment”) - that of China’s entry into the WTO and EU enlargement - and cites Rexecode, an economic research institute, for whom “les 35 heures expliquent la soudaine perte de compétitivité de la France” (“the 35-hour week explains France’s sudden loss of competitiveness”), pointing to a 35% drop in French market share in world trade between 2000 and 2010. The Budget Directorate puts the cumulative cost of the reform at €118.3 billion over 2003-2013. To that figure, the report adds a cost, not a gain: “celui de la défiscalisation des heures supplémentaires, mise en place en 2007 et supprimée par François Hollande en 2012” (“the cost of the tax exemption on overtime pay, introduced in 2007 and abolished by François Hollande in 2012”). On employment, INSEE (the national statistics institute) credits the 35-hour week with creating 350,000 jobs between 1997 and 2002; but a 2007 report from the Conseil d’analyse économique (an economic-advisory body attached to the Prime Minister’s office), quoted by the report, concludes that “la baisse de la durée légale de 39 à 35 heures a eu, au mieux, un impact très marginal sur l’emploi” (“the cut in the legal work week from 39 to 35 hours had, at best, a very marginal impact on employment”) - it was, per that same report, payroll-tax exemptions on low wages that drove most of the job creation.
Capital, taxation and debt
The 1982 finance law, passed on 30 December 1981, created the impôt sur les grandes fortunes (IGF, tax on large fortunes), forerunner of the wealth tax (ISF): for the first time, France taxed the stock of wealth annually rather than income alone. The report calls this “le moment où la culture du prélèvement l’emporte sur celle de la création de richesses” (“the moment when the culture of the levy prevails over that of wealth creation”). It cites the OECD, for which “les impôts sur la fortune sont parmi les plus distorsifs car ils taxent les actifs indépendamment de leur rendement réel” (“wealth taxes are among the most distortive, since they tax assets regardless of their actual return”), and reports a Rexecode study finding that around 19,000 taxpayers subject to the wealth tax left France between 1982 and the 2018 conversion of the ISF into the IFI (real-estate wealth tax), taking with them a cumulative taxable estate estimated at €72 billion in current euros - nearly €100 billion in present value. The tax’s yield nonetheless stayed modest: a little over €5 billion a year before 2018, €2.2 billion for the IFI in 2024, according to DGFiP (the tax administration’s statistics office).
The report then reads the 1986 Chirac privatizations - Saint-Gobain, Paribas, Société générale, more than €100 billion raised by the early 2000s - not as a successful withdrawal of the state, but as a missed opportunity for sovereignty: according to the report, France privatized without building up major domestic institutional investors. The report draws on the OECD, whose data show pension-fund assets exceeding 100% of GDP in the Netherlands, more than 120% in the United Kingdom, and close to 160% in Denmark - against less than 15% of GDP for funded retirement schemes in France, according to the Cour des comptes. A direct consequence, documented by the Banque de France (the central bank): the share of listed French shares held by non-residents rose from around 10% in the early 1980s to more than 40% today; according to the report, which again cites the OECD, this share of foreign shareholders now exceeds 50% of capital in CAC 40 companies. One attempt existed, however - the “loi Thomas” of March 1997, which opened the way to pension funds - but the dissolution of the National Assembly a few weeks later buried it; it would take the 2019 pension-savings plan (PER) for a scheme to partially return to the idea.
This lack of budgetary discipline continues, for the report, up to 25 September 2011: that day, the shift of the Senate majority to the left led to the abandonment of the constitutional bill on the balance of public finances, adopted on 13 July that year, which would have written a budgetary “golden rule” into the Constitution - not a ban on deficits, but a requirement for a balanced multi-year trajectory. The report recalls that the 1974 budget, the last of Georges Pompidou’s shortened presidential term, remains the last budget surplus in French history. It notes a debt at 115% of GDP, and puts, according to Vie publique (the government’s public-information service) and the Haut Conseil des finances publiques (the fiscal watchdog), la dette de l’État at €3.4 trillion as of May 2026, with an interest burden of €54.4 billion in 2025, nearly 10% of state spending, set to reach €70 billion as early as 2026. This site has already told the story of this debt mechanism in “French Debt: The 1973 Lock They Never Explain to You”.
The welfare state and the family
The RMI is the third decision in this installment that does not quite say what its title suggests. “Symbole de l’extension sans fin de l’État social” (“Symbol of the never-ending expansion of the welfare state”), the report announces about the law of 1 December 1988 - but the chapter deals mostly with a more specific shift than spending alone: universalization, meaning the move from contributing worker as rights-holder to resident as rights-holder. The report identifies four successive movements since the oil shocks: emergency aid seen as temporary in the 1970s; “support” measures under means-testing - the ASS unemployment allowance in 1984, the RMI in 1988, the RSA (its successor) in 2009, which today covers 3.6 million people according to the CAF (the family-benefits agency); universalization proper, with family allowances extended to every resident from 1978 and universal health coverage in 1999; and finally the funding of entitlements with no link to a classic insurable risk, from abortion-cost reimbursement to medically assisted reproduction without pathology in 2021. On the scheme’s effectiveness, the report cites the Cour des comptes: the monthly return-to-work rate for RSA recipients stands at 3.9%, against 8.2% for jobseekers overall.
The installment’s last decision narrows the focus to the family. The 2015 social-security financing and finance laws, under François Hollande’s presidency, ended the universality of family allowances: their amount is now halved for households earning more than €6,000 a month, and quartered above €8,000. This measure came on top of a lowered cap on the “quotient familial” (the family-based tax-splitting mechanism) - from €2,336 to €2,000 per half-share in 2013, then to €1,500 in 2014 - and a cut to the birth grant, kept at €923.08 for a first child but divided by three from the second child onward. The report documents what followed: the fertility rate, at 1.97 children per woman in 2014, fell to 1.56 in 2025 according to INSEE - its lowest level since the First World War - and annual births fell from 800,000 in 2015 to 645,000 in 2025. It cites demographer Gérard-François Dumont, for whom the decline in births is explained “dans les mesures négatives prises sur la politique familiale au milieu des années 2010 et accentuées depuis” (“by the negative measures taken on family policy in the mid-2010s and intensified since”), and who regrets that no study was ever “réalisée au sujet des conséquences éventuelles sur le libre choix du nombre d’enfants, et donc sur la fécondité” (“carried out on the possible consequences for the free choice of family size, and hence for fertility”). By his calculations, quoted by the report, “le pouvoir d’achat de plus de deux millions et demi de personnes, réparties dans un demi-million de familles, qui a été amputé” (“the purchasing power of more than two and a half million people, spread across half a million families, was cut”).
What this installment finds
Three stories, then, each different from what its title promised: the payroll-tax exemptions amount to a critique of low-cost globalization, not an indictment of the welfare state; the privatizations are read as a problem of capital sovereignty, not a budgetary success; the RMI deals above all with the universalization of social rights, not merely their quantitative expansion. The figures cited - DREES, Cour des comptes, INSEE, OECD, Banque de France, Rexecode - can be checked independently of the framing phrases around them, “the preference for poverty,” “the missed opportunity to build pension funds,” “a rendezvous missed because of the left”: those remain the signature of an avowedly partisan think tank.
This eight-part series offers an outside reading of the report - it is not a publication of the Institut Thomas More. Read the full report (PDF, 112 pages, in French) - 1975-2025 : les 50 décisions qui ont coulé la France, coordinated by Jean de Belot, Tarick Dali and Jean-Thomas Lesueur, Institut Thomas More, June 2026.
