It’s a big problem for the defense industry actively seeking competent employees. What are we talking about? The new conditions for cumulating employment and retirement have gone relatively unnoticed, but they will become much stricter starting from January 1, 2027, after the adoption of the social security budget at the end of December by Parliament. This will not encourage the employment of seniors in France, where the employment rate for 55-64 year olds is one of the lowest in the European Union. It stands at 60.4%, compared to an average of 65.2% in the EU.
From that date, a person who has retired before the legal age (64 years in term, according to the government) and who resumes activity will see 100% of their income deducted from their retirement pension above a threshold of 7,000 euros per year. This will discourage all retirees – both modest and well-off – from returning to work. Because combining retirement and employment before 67 years old will become financially unattractive. And at the same time, in a side note, the recruitment pole of France Travail for the defense industry was handed over to retiree Dominique Vitte… Minister of Labor Jean-Pierre Farandou announced the creation of this pole at the end of January to meet the needs of the defense industry.
Revenue losses estimated at 3 billion
Currently, a person receiving full retirement can resume activity without a revenue ceiling. According to the Court of Auditors, around 710,000 people were affected by this in 2020, earning an average of 9,000 euros per year from their activity. With this reform, the government will gain an accounting revenue of 1.9 billion in 2030 (400 million in 2027).
However, on the other hand, the government will forego the salary and employer contributions paid to employ a senior. In addition, it will limit the purchasing power of seniors and restrict the competitiveness of private companies in need of highly experienced skills. Some experts believe that this reform will lead to state losses of around three billion euros. This is likely to be ultimately a misguided idea by the government, which was aiming to eliminate the “windfall effects” previously encouraged by governments through this mechanism.
The lack of arms in the defense industry
The new measures being implemented will therefore represent a revolution for seniors who want to continue working to supplement their pension, but also for the defense industry, which struggles to recruit skilled talents since the launch of the war economy and the increase in production rates. According to the Directorate General of Armaments (DGA), 10,000 jobs are vacant within the Defense Industrial and Technological Base (BITD). And according to the observer of BITD trades, nine out of ten trades are in tension. Moreover, according to Bpifrance, 62% of SME or ETI industrial leaders are facing recruitment difficulties, with tension rates exceeding 70% for certain metallurgical trades.
For the BITD (220,000 direct and non-relocatable indirect jobs), which includes nine large industrial groups of European and global stature, 4,500 SMEs-ETIs and startups, of which 1,000 are identified as strategic, seniors are currently in high demand for their skills. Clearly, there is a shortage of labor and seniors are very useful for knowledge transfer and program security. This reform of employment-retirement accumulation is likely to dry up a pool of both experienced and highly flexible skills. Furthermore, this pool can easily be mobilized to support companies in increasing the pace of defense industry production.
The aging workforce is a major factor of vulnerability because the average ages of certain industries’ trades are sometimes high. Thus, departure rates at the end of careers are expected to exceed 35% in certain trades by 2030 (graphic industries, metallurgy, electricity and electronics, mechanics). “Without structured transmission devices (companionship, mentoring, senior interim), the risk of non-documented know-how loss is high,” says the company in the interim.
Decline in birth rate
This reform comes at the worst possible time. Seniors leaving the labor market are much more numerous than the new generations entering it. And it’s far from over. Because the birth rate has been declining in France for several years. In 2025, 644,000 babies were born, 2.3% less than in 2024 and, more importantly, 24% less than in 2010, according to INSEE. This is the lowest number of births since the end of World War II. As a result, the natural balance, which corresponds to the difference between births and deaths, has become negative (-6,000 people).
