Unemployment insurance reform: between billions in savings and tougher rights, what is the government’s plan? – 05/22/2024 at 5:31 p.m.

Unemployment insurance reform: between billions in savings and tougher rights, what is the government’s plan? – 05/22/2024 at 5:31 p.m.
Unemployment insurance reform: between billions in savings and tougher rights, what is the government’s plan? – 05/22/2024 at 5:31 p.m.

A target of “3.6 billion” euros in savings and 90,000 additional people in employment: the contours of the unemployment insurance reform are becoming clearer, notably with an expected tightening of the conditions for granting rights.

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(AFP / GEOFFROY VAN DER HASSELT)

The Minister of Labor Catherine Vautrin presented on Wednesday May 22 and Thursday to the social partners the work directions to reform unemployment insurance, with tougher conditions of access to compensation.

The measures envisaged would allow 3.6 billion euros in savings, according to the executive which hopes that, thanks to them, 90,000 additional people will be employed. According to those close to her, Ms. Vautrin hopes that “the government copy can evolve following these consultations”.

In an interview with L’Express published on Wednesday, Emmanuel Macron praises a reform which “will strengthen the effectiveness of our compensation system and work incentives. We act at the right time in the cycle, because that is when growth prepares to leave that we must prepare the conditions for toughening unemployment insurance. Here are the avenues on the table.

Opening of rights

Currently, to qualify for rights, you must have worked six months during the last 24 months, which constitutes the affiliation reference period.

The government plans to move to eight months worked over a reference period of only 20 months. Conversely, the CFDT wanted to go from six months worked to five months.

Unédic, which has not evaluated the impact of the hypothesis presented by the government, calculated that if the minimum time was increased to seven months, this would affect 11% of beneficiaries and would save 400 million euros. If it were raised to 12 months, the economy would amount to 2.3 billion.

Reducing the reference period from 24 to 18 months would allow savings of between 5.1 billion and 7.5 billion euros.

Seniors

The maximum duration of compensation is currently 18 months for those under 53. Employees aged 53 and 54 can be compensated for up to 22.5 months, and those aged 55 and over for up to 27 months.

The executive plans to remove the first level, and to reserve the benefit of longer compensation for unemployed people aged 57 and over.

Cumulative salary – allowance

To encourage unemployed seniors to return to work, the government wants to create a “resumption of activity bonus” which will make it possible to supplement a salary lower than the previous one. The cost of this measure would be offset by a capping of the system for maintaining the rights of unemployed people close to retirement, noted François Hommeril, of the CFE-CGC, pointing out that this would penalize executives.

Monthly payment

Instead of being calculated based on the number of days in the month (between 28 and 31), the allowance paid should in the future be the same every month for an unemployed person who has not worked during the period, on a 30 day basis. This will cause unemployed people who have not worked for an entire year to lose five or six days of compensation.

Modulation

Under the principle of “countercyclicality”, which has applied since February 2023, the duration of unemployment benefits is reduced by 25% when the unemployment rate remains below 9%. This rate is currently 7.5%.

This modulation would be reinforced if the unemployment rate falls below 6.5%, which would make it possible to generate around 3 billion euros in additional savings.

Extension of the bonus-malus

Emmanuel Macron’s campaign promise in 2017, the bonus-malus is a system hotly contested by employers which aims to fight against the abuse of short contracts.

It currently concerns companies with 11 employees and more than seven sectors that consume a lot of short contracts (such as accommodation and catering or transport and warehousing).

This involves modulating the employer’s unemployment insurance contribution – 4.05% of the payroll – upwards (malus) or downwards (bonus), depending on “the separation rate” of companies, compared to the median rate in their sector.

This bonus-malus system for short contracts should be extended to more sectors.

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