Unemployment insurance: fixed-term reform (in principle)

Posted Oct 31, 2022 7:27 AM

France has lost none of its creativity in social matters, whatever the color of the government at work. The latest example to date: the “bill on emergency measures relating to the operation of the labor market with a view to full employment”. Even if the transition to the joint committee will require a lot of skill from the majority, its adoption is expected in mid-November. The Labor Code will then be enriched with a new kind of object: fixed-term reform!

This “RDD” is part of Emmanuel Macron’s campaign promises. It benefits from the support (not assumed) of LR and that (fully assumed) of the Medef and the CPME, the U2P having expressed reservations. The left, the RN and the unions denounce, on the contrary, an attack in order against the precarious. The objective is quite clear. The rules of compensation not encouraging enough to return to work, according to the government, it is a question of making them evolve according to the economic situation: more incentive when employment abounds, as at the moment, more protective in low water period.

Eleven months, not one more

This principle has earned a name, that of “countercyclicality”. To implement it, it is first necessary to determine which parameters to harden or improve according to the situation. The Minister of Labour, Olivier Dussopt, targets the number of months needed to be covered – currently six out of the last twenty-four – or the duration of this cover (twenty-four to thirty-six months depending on age). It is then necessary to stop the indicators making it possible to decide if one passed from a state of the labor market to another. There, it is the relationship between the number of jobs available and that of the unemployed which is popular.

A consultation with the social partners is underway to stop all this. Curtain up scheduled for November 21. The time to write the decree, to have it validated by the Council of State and to update the Pôle emploi software… all this must come into force on 1er next February, until the following December 31 according to the date fixed by the bill. The reform is therefore planned to apply for eleven months, not one more. And even seven months if the senators, who voted the limit of August 31, win their case in the joint committee!

Why so little when this counter-cyclicality is one of the outcomes of “Macronian” thought on unemployment insurance, thought nourished by Marc Ferracci, Renaissance deputy and former adviser to Muriel Pénicaud when she was Minister of Labour, or certain economists in court, like Pierre Cahuc?

To understand, we have to go back to what has happened since 2019. Noting the failure of the social partners to negotiate (as is customary approximately every three years to take account of changes in the labor market) a new agreement unemployment insurance, the Philippe government regained control by a so-called “deficiency” decree. Due to Covid-19 and the legal referrals from the unions, this decree only came into force at the end of 2021 and falls on October 31, the deadline which had been set for it.

A simple decree currently being validated will extend them until January 31, 2023, until another (!) – which will carry countercyclicality on its baptismal font at the end of the consultation – takes over. If the bill has limited its lifespan to eleven months, it is because the government has promised the social partners a negotiation next year on the governance of unemployment insurance which, in fact, needs to be flattened.

Register in time

Against their will, unions and employers who have been managing the scheme since 1958, have had to make more room for the State since 2017: not only have employees’ unemployment contributions been replaced by a share of CSG, therefore tax, but in addition, the agreement negotiations must follow a framework document written by Matignon. There is also the question of the role of Parliament or of independent experts. Clearly, it will be a question of determining by whom and how the rules of compensation for the unemployed will be determined, for a first application at the beginning of 2024. Hence the fixed duration of the reform.

So much for the form. But on the bottom, what is the point of launching a reform that is likely not to apply? Or rather not to apply in the direction wanted by the government? Since Covid-19, employment forecasts have become very uncertain. However, with the coming slowdown, it is likely that hiring will decrease and, with it, recruitment difficulties.

At least three reasons can be advanced. First, it’s about ticking a box in Macron’s list of campaign promises. In these times of relative majority any victory in Parliament is good to display. The labor market, secondly, may hold up better or rebound faster in the first half of 2023. If not, the most important thing for the government – the third possible reason – is not that the reform applies (even if he wishes) but to take a date.

Clearly, whatever the result of the negotiation on the governance of Unédic, countercyclicality will remain one of the cardinal principles of the rules of compensation, at least until 2027, whether the unions like it or not. Like the modulation of employer unemployment contributions according to the labor turnover rate. Applied to less than 20,000 companies today, this bonus-malus is intended to become widespread, no offense to employers.

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